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Foreign Exchange Market

First presented In “special topics in finance“ course in economic and management faculty of Sharif universityOctober 22, 2011

Hossein Abdoh TabriziMaysam Radpour & Pedram Jahangiry

What is FOREX?

Forex – The Foreign exchange: Market exists wherever one currency is traded for

another. It is the largest and most liquid financial market in the world, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.

Structure of Foreign Exchange Core of the Foreign

Exchange is the institutional Interbank Market

Retail Forex brokers bridge the interbank and retail Forex markets

Interbank Market

Retail

Forex Market Retail Forex Brokers

BROKERS

Structure of Foreign Exchange

Central Exchanges: Physical location

Ex: New York Stock Exchange, Chicago Board of Trade, Chicago Mercantile Exchange

Regulated by home governments

Ex: SEC in the United States

All transactions processed through the exchange

Foreign Currency Market: Over-the-Counter

market No physical location Market participants

connected through worldwide network

No overarching regulatory body

Transactions are made through access to the OTC market

FX Features Largest Market in the world The average trade per day is more then 3-4 trillion $ No commission 24-hour market Leverage 1:50, 1:100, 1:200 Use all the same market tools (Limits, Stops and etc

) Financial Times foresees about 200% grow in next 3

years, because of arrival of investment and pension funds

Make money in both rising and falling markets Leverage 1:50, 1:100, 1:200

$ 3.5Trillones

$ 500Billones

$ 305Billones

$ 38Billones

When Do Currencies Trade?

Tokyo

LondonNew York

Sydney

Most traded currencies by

value

Experienced Dealer Say

Not easy to learn Most lose a lot of $$ at first before

learning how it works Hard to find big Long-Term trends for

the conservative & passive trader Deals with Behavioral Finance

Technical analysis: based on indicators such as moving averages, volume oversold and undersold conditions etc

Fundamental analysis: based on news and economic events,speeches by Key personalities such as fed chairman,ECB chairman etc.

Stochastic !!

Technical / Fundamental Analysis and stochastic

Questions?