So-called exotic currencies have long offered
enormous profit potential as well as very substantial risks. The most
noticeable approach has been to single out weak, but fixed currencies for
brutal speculative attacks, leading to large devaluations and extensive
economic problems for the countries involved. The reason that many emerging
currencies are artificially supported to the US dollar or other currencies
is normally to force local monetary authorities to act with more discipline and
to persuade holders of the currency against the risk of depreciation.
Unfortunately, it has proven nearly impossible for most emerging countries to
maintain the necessary discipline to justify stable currency levels and the
result is nearly always a dramatic devaluation. In leveraged trading, such
devaluations offer big profit potential, but in the intermediate periods where
the currency is stable, high interest rates will benefit investors with the
nerve to hold onto the currency. This makes the emerging markets very tricky to Forex market
trading and while nobody should Forex market trading any foreign exchange
market without a solid grasp of the technical aspects, this is even truer in
emerging markets. Seen from a commercial company's point of view, however,
failure to protect against the risks in such markets can be fatal. Mainly,
interest focuses on South East Asia and South America, but there is no reason
that both the African Continent and Eastern Europe should not provide
interesting markets in the future. And some words about of how currencies are traded in the
Forex market. In the Forex, currencies are traded in dollar amounts called
Lots. One lot is equal to $1,000, which can control $100,000 in currency. This
is known as the "margin". Yes with $1000 only you can control
$100,000 worth of currency. Currencies are always traded in pairs in the Forex market.
Each pairs has its own unique notation that expresses what currencies are being
traded. The notation for a currency pair will always be in this sort of format: ABC/XYZ Now ABC/XYZ is not a real currency pair, its just an example
of the notation used to identify a currency pair. In this example of ABC/XYZ,
ABC would be the symbol for one countries currency and XYZ would be the symbol
for another countries currency. Here are some of the creal and common symbols used in
the Forex market: The most commonly traded currencies are referred to as the
'Majors': Most commonly traded currency pairs are: These are the symbols you will most commonly see in a Forex
market platform. Of course there are many other symbols for other currencies as
well, but these are the most commonly traded ones. A currency can never be traded by itself. So for example you
can never trade a JPY by itself. You always need to compare one currency with
another currency to make a trade possible. This is the heart of the Forex
market. Visit
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Wednesday, March 26, 2008
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