| What are you really selling or buying in the currency | | | | use a concrete example. If you went into an |
| market? | | | | electronics store and purchased a computer for |
| The short answer is nothing. The retail FX market is | | | | $1,000, what would you be doing? You would be |
| purely a speculative market. No physical exchange of | | | | exchanging your dollars for a computer. You would |
| currencies ever takes place. All trades exist simply as | | | | basically be short $1,000 and long 1 computer. The |
| computer entries and are netted out depending on | | | | store would be long $1,000 but now short 1 |
| market price. For dollar-denominated accounts, all | | | | computer in its inventory. The exact same principle |
| profits or losses are calculated in dollars and recorded | | | | applies to the FX market, except that no physical |
| as such on the trader's account. | | | | exchange takes place. While all transactions are |
| The primary reason the FX market exists is to | | | | simply computer entries, the consequences are no |
| facilitate the exchange of one currency into another | | | | less real. |
| for multinational corporations who need to trade | | | | Great Returns in Currency Trading |
| currencies continually (for example, for payroll, | | | | The opportunities for unmatched returns and |
| payment for costs of goods and services from | | | | investment protection in the brave new world of |
| foreign vendors, and merger and acquisition activity). | | | | foreign currency investing are second to none. In |
| However, these day-to-day corporate needs | | | | Foreign Currency Trading, financial executives Russell |
| comprise only about 20% of the market volume. Fully | | | | Wasendorf, Sr., and Russell Wasendorf, Jr., describe |
| 80% of trades in the currency market are | | | | foreign currency trading in plain terms, and help you |
| speculative in nature, put on by large financial | | | | understand the risks, benefits, and operational |
| institutions, multi-billion dollar hedge funds and even | | | | requirements that you will need to take advantage |
| individuals who want to express their opinions on the | | | | of this market’s tremendous potential. Look to |
| economic and geopolitical events of the day. | | | | Foreign Currency Trading for clear explanations on |
| Meaning of Trading in Pairs | | | | the mechanics of foreign currency trading, in-depth |
| Because currencies always trade in pairs, when a | | | | discussion of all pertinent foreign exchange rules and |
| trader makes a trade he or she is always long one | | | | regulations, and a comprehensive glossary with |
| currency and short the other. For example, if a trader | | | | literally hundreds of terms essential to forex trading. |
| sells one standard lot (equivalent to 100,000 units) of | | | | With formerly imposing currency trading restrictions |
| EUR/USD, she would, in essence, have exchanged | | | | having been struck down in recent court rulings, the |
| euros for dollars and would now be short euro and | | | | world of foreign currency trading is an exciting and |
| long dollars. To better understand this dynamic, let's | | | | rapidly-expanding field. |