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 FOREX: What Is It And How Does It Work?

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PostSubject: FOREX: What Is It And How Does It Work?   Sat Sep 04, 2010 5:52 am

The Foreign Exchange market, also referred to as the "Forex" is the biggest and largest financial market in the world. It has a daily average turnover of US$1.9 trillion- just imagine that amount of money! Don't you want to join this trillion-dollar industry?

Forex is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). So basically, Forex is trading.

There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency.

The other 95% is trading for profit, or what you call speculation. Investors frequently trade on information they believe to be superior and relevant, when in fact it is not and is fully discounted by the market.

On one side of each speculative stock trade is a participant who believes he has superior information and on the other side is another participant who believes his information is superior.

For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid- meaning its in cash or convertible to cash) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors.

A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur — real time- day or night.

The Forex market is considered an Over The Counter (OTC) or 'interbank' market. This is because the transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange compared to stocks and futures markets.

Understanding Forex quotes

Reading a Forex quote may seem a bit confusing at first. However, it's really quite simple if you remember two things: 1) The first currency listed first is the base currency and 2) the value of the base currency is always 1.

The US dollar is the centerpiece of the Forex market and is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 110.01 means that one U.S. dollar is equal to 110.01 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote we previously mentioned increases to 113.01, the dollar is stronger because it will now buy more yen than before.

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.7366, meaning that one British pound equals 1.7366 U.S. dollars.

In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

When trading Forex you will often see a two-sided quote, consisting of a 'bid' and 'offer'. The 'bid' is the price at which you can sell the base currency (at the same time buying the counter currency). The 'ask' is the price at which you can buy the base currency (at the same time selling the counter currency).

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PostSubject: Re: FOREX: What Is It And How Does It Work?   Thu Nov 25, 2010 2:12 am

Finding the Best Credit Card to Suit Your Needs

There is no one best credit card for everyone. Deciding which is the best credit card for you, depends entirely on your particular spending habits and what you would like the credit card to do for you.

Ideally, one should have several different credit cards — each one offering you distinct advantages and suiting your various purposes.

If you frequently charge gasoline purchases to a credit card, you should have a gas rebate credit card offering cash back on gas purchases. These types of credit cards are particularly useful for those who need to keep a record of gasoline expenses. And, at the same time, you may as well be taking advantage of the cash back option, not being offered by the gasoline company credit card.

Our favorite of the gas rebate credit cards is the Discover Open Road Card. This card offers a 2% Cashback Bonus® on gasoline purchases and restaurant purchases as well. This means when you are traveling, you will not only be able to save money on your gasoline purchases, you will also be able to save money on your restaurant dining expenses along the way.

If you are one who travels for business, or you take annual vacations, paying for air fare and/or hotel expenses every year, you would benefit from a travel rewards credit card. All the money you spend throughout the year on your credit card will accrue points which may be used toward travel expenses, and in many cases toward other rewards as well.

Our favorite is the American Express Preferred Rewards Gold Card. Being an American Express card member is extremely beneficial, considering all the perks that come with card membership.

American Express is known for their Membership Rewards Program, which allows cardholders to earn points on their purchases. Points may be redeemed for airline tickets on a large variety of airlines, hotel stays at major hotel chains, dining, merchandise, gift cards and much more.

If you are planning a large purchase, like that new big screen TV, and would like the advantage of paying no interest on your purchase — you might want to consider applying for one of the credit cards offering a 0% introductory interest rate.

The 0% introductory rate traditionally last anywhere from 6 to 12 months, depending on the credit card as well as your credit rating. There are currently a few cards offering 0% interest for as long as 18 months. The higher your credit rating, the longer your 0% introductory rate will last.

We hope this article has been helpful in deciding which credit cards may be the best cards for your needs.

Article Courtesy of: CreditCardApprovalCenter.com

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