Foreign exchange is a commodity that can be bought or sold and the cost reflects the supply and demand
of the currency in question. A currency in high demand will carry a higher value than one lower in demand.
Foreign exchange rates fluctuate by the minute and there are many factors that can influence the price,
including:
International Trade
A company selling internationally will receive moneys for sales in the local currency which will need
to be converted before the profits are banked. For example a British car manufacturer selling cars in
the US will sell in US dollars and convert profits into pounds sterling. This means that in times of high
volume sales the demand for the British Pound will increase, so, in turn, will its value.
Likewise consumers may buy directly from an overseas company or convert their money and spend it in
another country when on holiday. For example, in the 2012 Olympics in London, there could well be a surge
in the tourism industry which would increase the demand of the British pound.
International Investment
An increase in international investment in a particular country will also increase demand as investors
look to exchange funds to buy assets. An example is foreign investment in an emerging market such as the
Czech Republic. Overseas investors convert their money to invest in assets which will increase the demand
and value of the Czech Crown (koruna).
Trading in Foreign Exchange
Trading in currency carries a high level of risk and you should consider your experience, goals, and
tolerance of risk before moving forward. There are many things to consider and essentially your aim is
to predict events that will affect the worlds’ economies, and in turn the value of its currencies.
Some people will have more in depth knowledge than others and if trading in foreign exchange appeals then
we recommend seeking professional advice.
Investors and currency speculators can trade through brokers, banks and online trading brokers. Some
online brokers offer practice accounts enabling you to test the water before jumping in.
How do I start trading in foreign exchange?
Click here to Register (Easy-Forex™ offers a simple and quick registration process with no obligation); deposit your first trading "margin" amount, start trading.
You can read more about foreign exchange and how it works at http://www.hmrc.gov.uk/manuals/cfmmanual/cfm7020.htm
For a list of Forex traders visit: www.moneyjungle.net/businessdirectory/forex
For independent advice visit: www.moneyjungle.net/advice
Free currency trading game available at Oanda: http://fxtrade.oanda.com/fxgame/
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