Friday, April 10, 2009
What's Forex?
"Forex" stands for foreign exchange; it's also known as FX. In a forex trade, you buy one currency while simultaneously selling another - that is, you're exchanging the sold currency for the one you're buying. The foreign exchange market is an over-the-counter market. Currencies trade in pairs, like the Euro-US Dollar (EUR/USD) or US Dollar / Japanese Yen (USD/JPY). Unlike stocks or futures, there's no centralized exchange for forex. All transactions happen via phone or electronic network.
Forex API / Automated Trading
For traders interested in utilizing an automated trading system or developing their own black box strategy, FOREX.com supports fully automated trade execution via a proprietary API.
The API provides users with the ability to receive a real-time rate feed, submit trade requests, set and modify stop-loss and take-profit orders, and receive automated confirmations of trade activity.
For qualified users, we provide a testing environment that enables developers to "paper trade" and test their systems in real time before using the API in a production environment with actual funds.
FOREX.com’s API is a true standards-based XML interface that can be programmed in any network accessible language, from Perl-script to C++, Excel Macro to VB.NET managed code. The API is comprised of two separate technologies:
1. Rate Data InterfaceRate data represents the tradable prices published to the client. For this role we use a direct TCP/IP socket interface to the price publication system. To assist with programming in Visual Studio.NET and JAVA, we provide native components that handle the connection and link management. Each component creates events through delegates or call backs as appropriate.2. Trading FunctionsThe trading functions are initiated by the client in the form of a request. This logic is implemented using Web Services; an XML based SOAP interface that uses HTTP as its transport. Web Services have become the de-facto B2B protocol of choice through their ease of use and cross-platform portability.
For those clients looking to automate their strategy signals generated from scripting languages such as eSignal's Formula Script or TradeStation's EasyLanguage®, please click here.The API is available free-of-charge to FOREX.com live trading clients. We allow interested parties to register and access our API User Forum. Qualified developers have the ability to test the API with no up front monetary investment.
Getting Started
1.
Register For the API ForumHere you may view API documentation, exchange ideas, share comments and post information with other API users.
2.
Request an API Demo Account From the API Forum
3.
Complete the Account Application ProcessNo deposit is required; however, we ask you to provide us with your projected initial deposit.
4.
Develop Your APIYou can begin to program against the API and test your code using real-time data in a demo environment.
5.
Fund your live trading account and begin using the API in the production environment
The API provides users with the ability to receive a real-time rate feed, submit trade requests, set and modify stop-loss and take-profit orders, and receive automated confirmations of trade activity.
For qualified users, we provide a testing environment that enables developers to "paper trade" and test their systems in real time before using the API in a production environment with actual funds.
FOREX.com’s API is a true standards-based XML interface that can be programmed in any network accessible language, from Perl-script to C++, Excel Macro to VB.NET managed code. The API is comprised of two separate technologies:
1. Rate Data InterfaceRate data represents the tradable prices published to the client. For this role we use a direct TCP/IP socket interface to the price publication system. To assist with programming in Visual Studio.NET and JAVA, we provide native components that handle the connection and link management. Each component creates events through delegates or call backs as appropriate.2. Trading FunctionsThe trading functions are initiated by the client in the form of a request. This logic is implemented using Web Services; an XML based SOAP interface that uses HTTP as its transport. Web Services have become the de-facto B2B protocol of choice through their ease of use and cross-platform portability.
For those clients looking to automate their strategy signals generated from scripting languages such as eSignal's Formula Script or TradeStation's EasyLanguage®, please click here.The API is available free-of-charge to FOREX.com live trading clients. We allow interested parties to register and access our API User Forum. Qualified developers have the ability to test the API with no up front monetary investment.
Getting Started
1.
Register For the API ForumHere you may view API documentation, exchange ideas, share comments and post information with other API users.
2.
Request an API Demo Account From the API Forum
3.
Complete the Account Application ProcessNo deposit is required; however, we ask you to provide us with your projected initial deposit.
4.
Develop Your APIYou can begin to program against the API and test your code using real-time data in a demo environment.
5.
Fund your live trading account and begin using the API in the production environment
Pricing
At FOREX.com, you pay no commissions to trade. Your only transaction cost is the dealing spread - the difference between the bid and the ask price. Trade on spreads as low as 1-2 pips for most major currency pairs, backed by our commitment to deliver the best possible execution on every trade. Tighter spreads save you money
Dealing Spreads
Pair
As low as
Pair
As low as
EUR/USD
1.6
NZD/USD
1.3
USD/JPY
1.6
CHF/JPY
2.5
USD/CHF
1.8
CAD/JPY
3.5
EUR/GBP
0.7
AUD/JPY
4
EUR/JPY
1.8
NZD/JPY
4
EUR/CHF
1
GBP/JPY
3.3
GBP/USD
1.8
GBP/CHF
4
USD/CAD
1.8
EUR/AUD
4
AUD/USD
1.8
EUR/CAD
3.5
AUD/NZD
4.5
AUD/CAD
2
GBP/CAD
3.5
GBP/AUD
4.5
EUR/NZD
7.5
GBP/NZD
1.7
AUD/CHF
5.5
NZD/CHF
6
NZD/CAD
7.5
CAD/CHF
6
USD/HKD
3.3
USD/SGD
5
SGD/JPY
4.5
USD/NOK
21.5
USD/SEK
21
USD/DKK
7.5
EUR/NOK
21.5
EUR/SEK
21.5
EUR/DKK
4
Access even tighter spreads with FOREXProJoin our active trader program to access our tightest available spreads, plus premium forex trading tools and specialized service. Learn more about FOREXPro. Market driven pricing, with fractional pips for more precise quotingWith fractional pip pricing, our real-time executable prices are quoted in more precise 0.1 pip increments. This extra digit of precision allows you to take advantage of smaller price movements. FOREX.com's pricing is market driven; our proprietary rate engine aggregates prices from our institutional trading partners and publishes real-time quotes to our customers. Because these quotes are derived directly from interbank prices, our dealing spreads reflect available forex market liquidity.Sign up for a free 30-day practice account to familiarize yourself with our pricing and execution capabilities as well as all the features of the trading platform, including real-time charts, tools and research.
Dealing Spreads
Pair
As low as
Pair
As low as
EUR/USD
1.6
NZD/USD
1.3
USD/JPY
1.6
CHF/JPY
2.5
USD/CHF
1.8
CAD/JPY
3.5
EUR/GBP
0.7
AUD/JPY
4
EUR/JPY
1.8
NZD/JPY
4
EUR/CHF
1
GBP/JPY
3.3
GBP/USD
1.8
GBP/CHF
4
USD/CAD
1.8
EUR/AUD
4
AUD/USD
1.8
EUR/CAD
3.5
AUD/NZD
4.5
AUD/CAD
2
GBP/CAD
3.5
GBP/AUD
4.5
EUR/NZD
7.5
GBP/NZD
1.7
AUD/CHF
5.5
NZD/CHF
6
NZD/CAD
7.5
CAD/CHF
6
USD/HKD
3.3
USD/SGD
5
SGD/JPY
4.5
USD/NOK
21.5
USD/SEK
21
USD/DKK
7.5
EUR/NOK
21.5
EUR/SEK
21.5
EUR/DKK
4
Access even tighter spreads with FOREXProJoin our active trader program to access our tightest available spreads, plus premium forex trading tools and specialized service. Learn more about FOREXPro. Market driven pricing, with fractional pips for more precise quotingWith fractional pip pricing, our real-time executable prices are quoted in more precise 0.1 pip increments. This extra digit of precision allows you to take advantage of smaller price movements. FOREX.com's pricing is market driven; our proprietary rate engine aggregates prices from our institutional trading partners and publishes real-time quotes to our customers. Because these quotes are derived directly from interbank prices, our dealing spreads reflect available forex market liquidity.Sign up for a free 30-day practice account to familiarize yourself with our pricing and execution capabilities as well as all the features of the trading platform, including real-time charts, tools and research.
Thursday, April 9, 2009
Introduction To Forex Trading
There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares, so I will occasionally use examples from that market.
I began trading shares first and then I moved on to trading currencies; therefore, most of the examples I will be using in this book are derived from trading currencies.
If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.
The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.
The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.
It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.
The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.
The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.
THE MAIN ‘PLAYERS' IN THE FOREX MARKET
The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.
Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.
Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.
Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.
Large commercial and investment banks are the ‘price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.
Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.
Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.
I began trading shares first and then I moved on to trading currencies; therefore, most of the examples I will be using in this book are derived from trading currencies.
If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.
The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.
The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.
It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.
The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.
The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.
THE MAIN ‘PLAYERS' IN THE FOREX MARKET
The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.
Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.
Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.
Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.
Large commercial and investment banks are the ‘price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.
Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.
Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.
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