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Basic question - what do we trade?

  • Post #1
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  • First Post: Dec 11, 2005 4:48am Dec 11, 2005 4:48am
  •  Zazzy
  • | Joined Nov 2005 | Status: Member | 97 Posts
Hello
A friend of mine has asked me "what do you trade? do you buy/sell the currency itself, or some derivatives like options, futures or what?" Shame on me - I couldn't answer the questions precisely
Can you help me?

Another thing, concerning the "enormous spike..." thread: Is it actually really so, that if one of us enters long for a $1.000.000 position then the currency price itself goes up?

Thanks in advance!


My short scalping report for the last week: 32 trades, 20 wins, 47 pips. Scalping rules
time is money! Z
  • Post #2
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  • Dec 11, 2005 5:37am Dec 11, 2005 5:37am
  •  Blackship
  • | Joined Nov 2005 | Status: Member | 54 Posts
We're trading human emotions
 
 
  • Post #3
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  • Dec 11, 2005 6:57am Dec 11, 2005 6:57am
  •  narafa
  • Joined Jan 2005 | Status: Keep Learning | 1,180 Posts
Quoting Zazzy
Disliked
Hello
A friend of mine has asked me "what do you trade? do you buy/sell the currency itself, or some derivatives like options, futures or what?" Shame on me - I couldn't answer the questions precisely
Can you help me?
Ignored
Basically, we are trading spot currencies, which does not include any futures or options...However, it depends, some members here trade futures or options on futures...

You can get a good answer for your question by searching www.investopedia.com for the definitions of spots, futures and options...


Thanks,

Nader
 
 
  • Post #4
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  • Dec 11, 2005 7:11am Dec 11, 2005 7:11am
  •  JackJones
  • Joined Aug 2005 | Status: 888 | 1,019 Posts
I wonder myself sometimes. I buy/sell spot FX through a retail broker so I don't think I'm trading anything in the "real" market other than the charts they show me.

I also trade Index CFDs. These again, don't really exist, so if I was to be honest I don't think I "trade" anything.

But my bank balance goes up and down so perhaps I'm trading that??
grist for the mill
 
 
  • Post #5
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  • Last Post: Dec 11, 2005 2:38pm Dec 11, 2005 2:38pm
  •  merlin
  • Joined Mar 2004 | Status: Magic Man | 3,220 Posts
you are trading spot forex, which means actual cash.

when you buy 1 LOT of the EURUSD, you are buying $100,000 worth of Euros. you are not doing the physical transaction of actually giving the dollars to someone and taking delivery of the euros, but all of that is going on behind every trade you make. its not just trading lines on charts, there is a complex network of banks that are supporting this infrastructure.

if you really want to understand the inter-workings of the forex market, you should read Cornelius Luca's "Trading in the Global Currency Market". he gives detailed insight of the interbank network, explains the history of the market and has a lot of info on settlement procedures. this book wont necessarily make you a great trader, but you'll be able to answer questions like that posed to you by your friend
Relax and be happy.
 
 
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