International Finance



International Finance

Introduction

The forex market has different paths.The use of either more dependent on the amount of capital available for investment or how you intend to carry out transactions. Thus, establishing a first division, we can differentiate between unmanaged forex accounts trading accounts orself, i.e. where the investor makes his own decisions of buying and selling, or so-called managed systems or managed accounts. In recent decisions are made by professionals or automatic systems without direct intervention by the customer.

Discussion

Foreign Exchange Market

Carry an account unmanaged required to have time to continue operations, as the currency market is very dynamic and can fluctuate significantly within a few minutes (Bohl, Siklos & Sondermann, 2008, pp 112 - 120). It must also master the main techniques of forecasting and analysis, which are basically two:

Technical Analysis

It is based on historical tracking of exchange rates, both short term (the last days or minutes), and long term (historical evolution). Using the known candlestick chart (candlestick charts) or the like, are collected fluctuations of the currency pair analyzed, trying to predict their future behaviour (Sobel, 2000, pp 103 - 124).

Fundamental Analysis

Contrary to the prior art, fundamental analysis examines external factors that may influence the behavior of a given currency. Issues such as political and economic situation in general, changes in interest rates, unemployment data, environmental threats, large business projects, natural disasters, etc.. This technique is essential to be well informed on current events and financial press. Also you must know how to translate the various events to the behavior of each currency (Southall, 2008, pp 87 - 90).

Forex Fluctuations

Because fluctuations in the prices tend to be minimal, typically cents, you must have a significant amount of capital to these movements yield a measurable benefit. The standard lot available on the Forex market is 100,000 units of the currency being traded, but currently is not required to deposit amounts as large as the foreign exchange market is investment leverage. This means that to acquire currency to resort to external financing (Sobel, 2000, pp 103 - 124).

Thus we speak for example of a leverage of 100:1 (the most common), which means that 1 unit purchased currency could control 100 (Bohl, Siklos & Sondermann, 2008, pp 112 - 120). This, to control a standard lot of 100,000 pounds would suffice capital of 1,000 pounds. This is one of the attractions of the currency market as depositing only a fraction of the capital, you can get the same yields that if you invest the total. For this reason it is also a risky investment, because you can lose more money than you invested and this can happen quickly (Buck, 1992, pp 89 - 98).

Ways to invest in the Forex Market

As for the different possibilities of access to foreign exchange alternatives for all tastes and budgets:

Professional managers (Professional Forex Managers)

These are accounts administered by experts available to their best customers by private banking institutions or broker / dealers in the currency market. Usually requires a balance of at least $ 100,000 for ...