Forex Quotes

The most-traded currency, by far, is the U.S. dollar, with consistently greater than 85% of the average daily turnover in foreign exchange trading. The distant second place currency is the Eurozone’s euro, with around a 37% share. Rounding out the top currencies are the Japanese yen with approximately 16%, and the British pound with 15%. AUD/USD and USD/CAD are next in line in terms of trading activity, but are not generally considered among the majors. It is usually recommended for beginning traders to concentrate initially just on the major currencies. [2009] - James Chen

Trailing stop losses are often key components of professional risk management strategies, and can be used to great advantage by the typical foreign exchange trader. [2009] - James Chen

Most spreads on the major currency pairs, including EUR/USD, USD/JPY, GBP/USD, and USD/CHF, are usually in the vicinity of two to five pips wide. [2009] - James Chen

If a trader plans on ever buying and/or selling currencies during any type of fast market, it may perhaps be in the trader’s best interest to choose a fixed-spread broker. [2009] - James Chen

Rising interest rates (central bank tightening) have a tendency to contribute to an appreciation in a currency. If, on the other hand, there is a lowering of interest rates (central bank easing), the tendency is towards a depreciation of the currency. The direction of interest rate change is even more important. If the currency’s central bank continues to raise interest rates and indicates an intention to keep doing so, this can have a considerable impact on appreciation in the currency. [2009] - James Chen

It is imperative that foreign exchange traders pay close attention to interest rate differentials on all trades initiated, especially those that will likely remain as open positions for more than a day. [2009] - James Chen

The country with the higher rate will generally have the more valuable currency. The stronger economy, that with the higher GDP growth, lower inflation, greater productivity, political stability and a host of other factors will, over time, have the stronger currency. Any foreign investor in a country is also an investor in that country’s currency. [2009] - James Chen

The European Central Bank has a specific mandate to protect against inflation—-economic growth is secondary. The American Federal Reserve’s role is to promote economic growth and jobs, as well as to watch against inflation. [2009] - James Chen

In the fast-moving, impatient world of foreign exchange trading, longer-term could mean anywhere from as short as a week or a month to as long as a year, or possibly more. Position trading can be one of the most profitable styles of trading due to the fact that many currencies tend to trend exceptionally well on a longer-term basis. Position trading usually relies substantially on fundamental analysis, along with longer-term technical analysis. [2009] - James Chen

Trading exclusively in the direction of positive interest yield is one of the most prudent and sensible ways to trade long-term positions in forex. [2009] - James Chen

Always to have in the account, at the very least, ten times the amount of margin required for a typical trade. [2009] - James Chen

Many forex traders like to target a reward-to-risk ratio of 3:1 as the ideal. Shooting for 2:1 can often be more practical in many real-life trading situations. [2009] - James Chen

Instead of creating the rigid rule that exactly 2% of total equity will be risked on each trade, a more adaptable rule might be to require that no single trade can have a stop loss that exceeds, for example, 4% of total equity. [2009] - James Chen

Hedging within the forex market, though it may be a component of certain specialized trading strategies, is not one of the more viable methods for controlling risk in general forex trading. [2009] - James Chen

Newer traders probably want to start off with following only the four major currency pairs, which are the EUR/USD, USD/JPY, USD/CHF, and GBP/USD, and then gradually add in the crosses. [2009] - Kathy Lien

Traders will find a higher success rate by buying on retracements in an uptrend or selling on rallies in a downtrend. [2009] - Kathy Lien

First I will take an overall technical survey of the market and pick the currency pairs that have retraced to attractive levels for entry in order to participate in a medium-term trend. I determine if my initial technical view for that pair coincides with my fundamental view on the dollar as well as my view on how upcoming U.S. releases may impact trading for the day. Then I like to look at positioning using the FXCM Speculative Sentiment index to see if it supports the trade. If I am left with two equally compelling trade ideas, I will choose the one with a positive interest rate differential. [2009] - Kathy Lien

I recommend not risking more than 2 percent of your equity on any single trade. [2009] - Kathy Lien

GBP is laden with speculators. The British pound trades most actively against the U.S. dollar during the European and London trading hours. The initial movement at the London open may not always be the real one. It works best following the U.S. open or after a major economic release. [2009] - Kathy Lien

Carry trades are the most profitable when investors have low risk aversion. Before entering into a carry trade, an investor should be willing to commit to a time horizon of at least six months. [2009] - Kathy Lien