Online Forex (FX) Trading | Forex Brokers | Foreign Exchange Market

The past year has been very crucial for the U.S Dollar. In Jan, where its rate in terms of Indian Rupee was 44.2, it sunk to 38.4 by the end of the year. Also, if we look at the other currencies of the world, the U.S Dollar has become weaker comparatively. For instance, the price of Australian Dollar and Euro did not change much over the year.  Infact, there was an increase in the Canadian dollar, even if it was a small one. Leaving British pound being as an exception, all other currencies were not affected as U.S Dollar.

It hasn’t happened overnight though. Everybody’s aware of the falling price of the U.S Dollar in the foreign exchange market.

The consumer demand has slowed down over the year. And its continuous dropping rate has made the trade analysts wonder if the U.S economy will fall into a recession. Because if it does, it will not be a surprise to anyone. But if it really does, then where does the U.S dollar stand? This is a fateful question whose answer is dreaded by everyone.

The U.S market is seeing a slump in all the areas whether electronics, furniture, clothing. According to a news agency, 2007 has been the worst year for the U.S retailers since 2002. The growth in the labor market already retarding, it might lead the U.S economy into a recession.

Before going further, let’s find out what recession actually means.
Recession is a decline in a country’s gross domestic product (GDP) for two or more consecutive quarters of a year. Following this definition, we can say that the US economy is still safe from being descended into a recession. The reason being that in the last two quarters; its GDP growth was quite satisfactory. There has been just one bad quarter and the first quarter for 2008 has started, so it’s too untimely to judge the future of the US economy.

In this regard, the Federal Reserve has a big role to play. It has the power to determine
whether US economy will land in a recession. Traders were looking up to the Fed to help them out in this time of crisis. In a little more than a week, the Federal Reserve has lowered the interest rates by a total of 125bp, which is more than all of the rate cuts that they had made last year.

At present the US dollar is yielding only 25bp more than Switzerland’s Franc, which means that once the Fed lowers the rates again in March, as expected, then the US dollar will be tied with the Franc as second lowest yielding currency.  
 
In the meantime, there has been a huge hike in the price of Gold, thereby weakening the price of US dollar all the more.

What will the year 2008 bring in for the US dollar is still uncertain. Will the price of US dollar decline all the more in the Foreign Exchange market or will it fight with the current situation and emerge as a superpower as always. Well for this, we will just have to sit and watch.

Euro is now trading very close to a crowded area, full of support and resistance lines; a continuation of the south move will get the pair very close to the next support area around 1.3600/15..

If the beginners do not have the relevant information and knowledge about Forex market and trading, they are likely to lose all their money in it. This information was shared with all by Andy Poon, a spokesperson for the British Columbia stocks regulator, on Friday, in Vancouver, Canada.
He also stated that the Foreign exchange trading was not for new and untrained traders. 

Foreign exchange or Forex trading is where trading of foreign currencies takes place. Somewhat like a stock market where a trader trades one stock for another, here an investor trades one country’s currency for another

In the Forex market, the currencies are exchanged to make profit from the differences in the exchange rate between the two currencies too, almost like the stock market.

But Forex trading is a further complex trading of currencies, than that of trading equity. Internet, with its mushrooming online software platforms for trading are luring away aspiring traders to trade from home, making it even simpler for them to jump into it.
This has also opened up the world of foreign exchange trading to an extensive range of Forex aspirants.

Just because the investors feel that they know how to use internet, does not make them eligible for Forex. Trading Forex sitting at home is as complex as every other medium. Internet does not make it any simpler and safer. Trading foreign currencies is a complex procedure which involves a lot of expertise and knowledge.

The B.C. Securities Commission has warned every aspirant trader that trading Forex without appropriate skill and knowledge can be very risky.  

Andy Poon, a spokesperson for the British Columbia stocks regulator, is also of the opinion that online seminars and trainings for Forex trading are not sufficient for the amateurs to get full knowledge about Forex.
He also said that these online programs and seminars cannot substitute for the research, study and professional skills needed by a trader to battle the currency markets.

Andy Poon also stated that Forex is sometimes all about investing and trading on margin and in such cases, people tend to borrow money from others to make their investments. This kind of a measure by trading on margins can at times earn them extravagant profits, but it also has equal potential to get those traders extreme losses.

George Davis, chief FX technical analyst at RBC Capital Markets, is of the opinion that tracking the things that can have an affect on the value of a currency is a far more difficult process than tracing the factors responsible for affecting the stocks.

He said that for currency exchange, a trader needs to start with knowing all about what is going on with a particular country’s politics, as well as take into consideration its economy, government or central bank policy, and other geopolitical concerns.