Participating in the foreign exchange market (FX) involves trading currencies through a global market. Also called Forex, the market allows international investment and trade to occur among buyers and sellers throughout the different time zones in of the world. The terminology can be confusing for those unfamiliar with the practice and the process. This glossary of Forex terms gives a basic explanation of what they mean in this industry.

Foreign Exchange Market

The FX market is where currencies are traded. This is the largest, most liquid trading market in the world. Exchange markets for currency are made up of banks, commercial companies, investment companies, management firms, hedge funds and retail Forex brokers. The FX market is the largest financial market worldwide, and is therefore constructed by a global network of electronic communication that connects its participants to each other.

Broker

An FX broker, retail FX broker, or currency trading broker deals with a fraction of the volume of the overall foreign exchange market. These brokers have access to trading platforms through which they trade currencies on a regular basis.

Spot Rate

Spot Forex is the current exchange rate at which a currency pair can be bought or sold and it differs from the forward rate. The spot rate in this type of trading is the rate that is most commonly used by traders when trading with an online retail Forex broker.

FX Account

The type of trading account a person opens with a retail FX broker in order to trade. There are various accounts, but the initial one is often a Forex demo account. A demo account is used for training purposes, with no real losses or profit.

Market Hours

The hours during which trading takes place and market participants are able to buy, sell, exchange and speculate on currencies. The market is open 24 hours a day and five days a week. Due to the fact that the market operates in multiple time zones, trading can take place at any time.

Analysis

Forex analysis involves an examination of changes and trends in the FX market to be used by those trading to decide whether the purchase or sale of a currency pair would be appropriate. It is usually a technical analysis with the employment of charts, tools, economic indicators and current affairs.

Charts

These are charts which allow an FX trader to view historical currency exchange rates provided by Forex charting software. This software can be accessed usually for free when opening a new trading account.

Author is a freelance copywriter who writes about Forex trading and Forex broker. This material is considered a marketing communication and does not contain investment advice, an investment recommendation or an offer of or solicitation for any transactions in financial instruments.

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Forex Day Trading used to be the privileges of leading major banks and large finance corporations about a decade or so ago, until the United States passed laws and regulations and later opened up a total different level of opportunities to allow retail Forex Traders to be able to participate in this lucrative, yet high-risk investment. "Day Trading" in FX Trading is often plainly understood to be the opening and closing of a specific Forex trade, or order, in the same calendar day. This has essentially developed into one of the most effective Forex Trading Strategies and have already been implemented by countless successful Forex Traders since.

Although United States have now reduced the leveraging capacity that FX Trading retail brokers provide to their customers, it's still possible to get leverages of 500:1 and 100:1 with Forex Brokers from other countries such as United Kingdom or even Switzerland. With greater leveraging, it implies that FX Trading could possibly be a lot more financially rewarding than it has ever been, and therefore introduced an enormous possibility for great financial gains without demanding much initial capital investments. To illustrate, with a mere funding of $5000 and trading at 0.5 Ordinary Lot, common individuals undertaking FX Trading may now make an income of $250 should the Forex market progresses by a tiny fifty pips, or in other words, 0.5 cent movement of a currency pair. Despite the fact that massively leveraged FX Trading accounts could possibly amplify your earnings by several folds, Forex Traders need to take extra caution on the fact that while profit potentials might be large, the risk of rapidly losing your initial investment capital, too, accelerates proportionally with higher leveraging power.

To date, you could find an estimation, done by a prevalent Forex Community, that the overall quantity of traders taking part in FX Trading have grown by approximately 10 times since a decade ago. The global popularity of FX Trading amongst retail traders would also mean good business opportunities for lots of businesses involved in the supply chains - ranging from brokerages to internet marketers and so forth. Considering the fact that FX Trading is actually a zero-sum investment, meaning that an individual must bear a loss in order to allow another trader to make a profit. Having said that, have you ever wonder just how many Forex Traders are in fact producing consistent earnings? Based on a President of a popular Retail Broker, it is quoted that he would be in shock should more than 20% of the traders are earning profits within a particular trading day. That is just how poorly we, the non-institutional FX Traders, perform - for a couple of solid reasons, of course.

First of all, Retail FX traders, in contrast to Major Banks, don't get to enjoy the advantages of observing every news flash and international events that takes place 24/7. Hence, non-institutional FX traders are usually more prone to making less-informed decisions, which as a result, could lead to losing streaks and eventually, perhaps, destroys the self-confidence of these traders. Next, non-institutional FX traders commonly trade alone, or at best along with some Forex forums, which suggests these investors would have to keep track of the price action, the candlestick pattern build-ups, the international news, economical reports and so forth, and at the same time he is supposed to be able to make critical trading decisions in a split second. Although this may very well be carried out by a group of 10 Forex Experts readily, repeating this all by yourself would indeed have diminishing effects to your FX Trading regime.

Does that mean Retail Traders will need to master most of these challenging tasks so as to eventually begin making profits? Not at all! It's always advisable that ordinary FX traders should seek specialists for help. Genuine Forex Signals Services generally comprise of a group of Forex professionals, whom would subsequently watch the forex market thoroughly and hunting for profitable trades. Typically, all of the major components of FX Trading - ranging from international breaking news and economic reports to technical analyses and correlations within all major currency pairs, are extensively analyzed prior to committing into any trades.

If you are ready to take a plunge into FX Trading, you must really check out Forex Vice Forex Signals, a top recommendation of Anderson, as this would save you a lot of time and money that you might otherwise risked.

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Firstly let's begin by understanding what exactly a Penny Stock is and how they are traded. They come up a lot when doing research about investing and advertising would have a new investor believe they have the potential to make someone a lot of money out of very little. In some cases, that can be true since they generally trade for under $5 with low market capitalization, but often times penny stocks, which are traded outside of the major market exchanges, are tricky to regulate and have a history of being wrought with fraud.

Are They Safe?
They are commonly regarded as highly speculative and high risk as a result of their lack of liquidity, large bid-ask spreads, small capitalization and the few disclosure requirements they are subject to. Some of these stocks have become more legitimate in recent years as a result of the new owner of the Pink Sheets. These stocks are usually traded on the Pink Sheets or the Over the Counter Bulletin. The Pink Sheets now require that the filings for these micro cap stocks be taken online where they are subject to greater accountability. Prior to this, records of penny stocks existed only on paper.

The name does not imply that a stock trades for 1 cent since there is some debate on what can be considered a penny stock. Some investors consider a selected stock trading for under $5 a penny stock while others believe the term refers to stocks trading for under $1. Typically these stocks are from tiny companies with speculative shares that is not required to file as exhausting disclosures, filings or meet as many regulatory standards as those trading on the more established exchanges.

The Pink Sheets was first established in the early part of the 20th century as the National Quotation Bureau, but now is known as OTC Markets Group. The company reported and published listings and quotes for tradable securities. The publications got their names from the color of paper they were printed on, both Yellow and Pink Sheets.

Technically, Pink Sheets is not an actual stock exchange, but a means for qualified independent brokers to exchange securities. Generally, it is now known as a platform to trade penny stocks, and other micro cap stocks, which is stock of public companies which have a market capitalization of roughly $300 million or less.

While most companies quoted by Pink Sheets do not file financial reports with the Securities and Exchange Commission SEC, the companies listed in the Pink Sheets OTCQX tier provide substantial disclosure to the marketplace, and are considered to be the top tier of the over-the-counter OTC market. The rest of the tiers, ranked from highest to lowest based on the amount of information they make available to the market, are as follows:
OTCQBCurrent InformationLimited InformationNo InformationCaveat Emptor

Blue Chips on OTCQX

While most companies quoted in the Pink Sheets tend to be small companies that trade at low volume, not all of them are penny stocks. Companies in the OTCQX and OTCQB tiers are worthy of investor consideration even though they are micro cap stocks, and include larger, well-known companies like Roche, Adidas, and Deutsche Telekom.

Pink Sheets Penny Stocks

Most of the companies below the "Current Information" tier of the Pink Sheets are generally penny stocks and micro cap stocks that do not meet the minimum listing requirements for trading on the major U.S. exchanges, might be close to bankruptcy and are typically seen as riskier investments.

In fact, micro cap stocks and penny stocks are notorious for their volatility. They can also be affected by price manipulation and it may be extremely difficult to liquidate bought positions of both penny stocks and micro cap stocks.

Investors, however, should not be turned off to the investment opportunities of the Pink Sheets, as there are many good companies to be found among the penny stocks and the micro cap stocks. Be aware, however, of scams, and do diligent research before buying.

Equities Editorial Desk
http://www.equities.com/

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For the majority of Forex traders their trading strategy will be based very largely on technical analysis. This means, amongst other things, that the Forex trader must have a sound knowledge of technical analysis and, in particular, an ability to read charts.

Price charts are used to convey information about Forex prices at specific time intervals, which can range from as little as one minute up to several years. Prices can either be plotted as simple line charts or price variations can be plotted for each time interval to produce a bar or candlestick pattern.

Line charts are particularly suitable for giving a broad overview of price movements. They are normally plotted to show the closing price at each chosen time interval and they are easy to read and clearly define patterns in price movements.

Although not quite as easy to read, bar charts provide far more information. The length of each bar is used to indicate the price spread for a given period, with long bars indicating a large variation between high and low prices. Opening prices will be shown on the left tab of a bar and closing prices on the right tab so that you can see at a glance whether the price has risen or fallen and just what the variation in price was. When printed out bar charts can be difficult to read but most software charts will have a zoom function which makes reading closely spaced bars much easier.

Candlestick charts, which were invented by the Japanese to analyze rice contracts, are similar to bar charts but are easier to read as they are color-coded. Green candlesticks are used to show rising prices and red candlesticks to show falling prices.

When reading candlestick charts the candlestick shapes viewed in relation to one another form various patterns according to the price spread and the proximity are opening to closing prices. Many of these patterns have been given names such as 'Morning Star' and 'Dark Cloud Cover' and once you become familiar with these patterns it is easy to pick them out on a chart and to identify trends in the market.

To supplement the information provided by charts a number of technical indicators are also used. These include trend indicators, strength indicators, volatility indicators and cycle indicators and all of these are used to anticipate movements in the market and market volume.

The most commonly used Forex technical indicators include:

Average Directional Movement (ADX). ADX is used to determine whether or not a market is entering an upward or downward trend and just how strong the trend is.

Moving Average Convergence/Divergence (MACD). MACD shows the momentum of a market and the relationship between two moving averages. When, for example, the MACD line crossings of the signal line it indicates a strong market.

Stochastic Oscillator. The stochastic oscillator indicates the strength or weakness of a market by comparing a closing price to a price range over a period of time. A high stochastic indicates a currency that is overbought while a low stochastic points to a currency which is oversold.

Relative Strength Indicator (RSI). RSI is a scale from 0 to 100 which indicates the highest and lowest prices over a given time. When prices rise above 70 the currency is considered to be overbought while a price below 30 would indicate a currency which is oversold.

Moving Average. Moving average is the average price for a given time when compared to other prices during similar time periods. For example, the closing prices over a 7 day time period would have a moving average equal to the sum of the 7 closing prices divided by 7.

Bollinger Bands. Bollinger bands are bands that contain the majority of a currency's price. Each band consists of three lines - the upper and lower lines indicate the price movement with the middle line showing the average price. In conditions of high volatility the gap between the upper and lower bands will widen. If a bar or candlestick touches one of the bands then it will indicate either an overbought or an oversold condition.

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