Monday, October 12, 2009

Introduction to the currency market (Forex) Part III

Buy and sell

The implementation of the deal, whether buying or selling be the first pair in the arrangement, the base currency
Ie if you make a purchase on this pair (eg EUR / USD), this means that you have to buy euro and sell the dollar, which pushed the dollar to buy the euro price, and if you have a sale, it means you have to buy the dollar and sell the euro, any euro price you paid to buy dollars

In this illustration, shows the answer to question repeated:

How do I sell before buying??

The answer: we sell when you do, it means that we bought a second currency, and paid the value of the currency first.

P-shop when he wants to implement the purchase of one of my husband, it is selling the currency counter currency, when you buy the euro (EUR / JPY), it means paying the price or sell the yen for a contract value of the euro, and vice versa, when you want to buy the Japanese yen, you sell or payment of value in euros.

In order to avoid repetition and lengthening just interested in the first currency basis, ie when we want to buy the first currency basis instruct procurement, and we want to buy the second currency say sell the first currency.
Example: in a pair the euro against the yen (EUR / JPY) say buy euro yen. To buy the euro and yen-selling, and when we want to buy the yen against the euro, say, selling the euro yen.
In other words, when we expect the rise of the price, any increase in the first coin we buy the first currency, and when we expect any decline in price rise of the second currency, we sell the first currency.


Price seems to currency pairs is the value of the second currency Mandfh each and every one is true from the first coin.
In other words: every one of the first currency basis equal to (price) of the second currency.
When we say P: GBP / USD = 1.5000
Faramz pound sterling a first in Formula One currency basis in this formula is the pound (because the first symbol) and the meaning that the price Malk topic in the formula is the amount owed from the second currency (the dollar) for one pound sterling (and one unit of currency)

That is, we are required to pay 1.5 dollars for one pound sterling.
Accordingly, as the high number indicating a higher price first currency basis for the second currency, and also meant the second currency's weakness against the first currency basis.
Banks have agreed to be a pricing currency pairs consist of four decimal places, for example
EUR / USD 1.2560
USD / CHF 1.2954
Except if the second currency is the Japanese yen, so the price component of double-digit only,
USD / JPY 110.93
GBP / JPY 203.17
The last digit of the right said to him, the point-price, and idiomatically (PIP) Labib.
And will further explanation of the point-price, God willing,

Size of contracts:

On the stock exchange will be the global trading based on the sale and purchase of fixed quantities of money, and called in the trading system, conduct, or (LOT) Lott.
The contract means the amount of money estimated (100 k) of the first currency basis, ie, a hundred thousand.
P when you buy a one of a pair (EUR / USD), it means you bought a hundred thousand euros and the dollar value paid by the apparent price, and vice versa when you sell, then you have a hundred thousand euros to buy dollars as the price shown.
There is a mini-contract ten full contract, that is, (10 k) or ten thousands of first currency basis.

Point (Pip) and price:

We have stated previously that the point (Pip) bib, is the last decimal place to the right and by the contract size (100,000) of the base currency, and the knowledge that one point is (0.0001) P output of multiplication is:
100.000 × 0.0001 = 10 from the second currency
If the dollar is the second currency (currencies direct), the value of the contract is $ 10
If the second currency is not the dollar (currency indirect) or (hybrid) would point value is also 10 of the second currency.
For more information on evaluation of the dollar, divide the 10 on the closing price of the second currency against the dollar.
In the dollar against the franc, USD / CHF = 1.2050, Swiss equal
10 ÷ 1.2050 = 8.30 USD
For mini-contract, the value of the point just one dollar for the first case or the result of dividing 1 on the closing price
Affair of currencies in which the yen, because the point is that (0.01) to arrive as follows:
100.000 × 0.01 = 1000 Yen
The divide 1000 on the closing price against the dollar.
Example: USD / JPY
1000 ÷ 115.60 = 8.65 dollars
In the decade mini foregoing ten.

The asking price (buy) (Ask) offer price (sale) (Bid):

Appears in front of each pair of currencies between two prices a slight difference in the number of points, one high and one low.
The difference in the number of points between the two prices is called proliferation or (SPREAD) spreads.
And is often between two and five points in the major currencies which one end of the dollar, and increases slightly in the cross-currency that does not correspond to the dollar.
Top price is the purchase price and demand (ASK) is the price which it is implemented the purchase or sale close by.
Lowest price is the price of sale or supply (BID) is the price which it is implemented by the sale, or close by the acquisition deal.
Spread The difference between the two rates is the usefulness of the mediator in this trade.

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