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Forex

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Exotic Currency - Definition

Exotic Currency Definition

Exotic Currency is a thinly traded currency.  These currency pairs are traded by pure speculators.  Unlike the major currencies, Euro, US Dollar, etc.

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Euro Libor Definition

What is the Euro Libor?

The Euro Libor is the Libor rate denominated in Euro.  The current Euro Libor rate is quoted based on the average of rates across sixteen European banks.  The Euro Libor represents the short-term lending rate that banks extend to each other on a daily basis.  This rate is set by a small group of wealthy London banks on a daily bas

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Xenocurrency

What is a Xenocurrency?

A xenocurrency is a currency which trades outside of its home country.  The name sounds a bit strange, but that is because the root word "Xeno" means foreign or strange, hence the name name xenocurrency.  When a xenocurrency is deposited in another country, it is called and quoted in eurocurrency as the Euro is the most valuable currency in the world.  It was once feared that inflation would be on the rise because there were too many central banks holding part of their reserves in xenocurrencies.  Banks got involved in the practice in the first place because reserve requirements and

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An authorized forex dealer is any financial institution that has received approval from a regulatory body to act as a dealer for the act of buying and selling currencies.  In the United States the National Futures Association (NFA) is responsible for registering and auditing entities involved in t

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What is the Currency Carry Trade?

The currency carry trade is created by simply borrowing funds at a low rate and investing these funds into higher yielding assets.  A very relevant example can be seen in the famous "yen carry" trade in which Japanese Yen are borrowed at an interest rate which is next to nothing and invested into higher yielding US 

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When you hear the term big figure in the forex world; the person is referring to the non-pip portion of the price quote.  The term big figure is also referred to as a "handle".  For example, the EUR/USD is currently trading at 1.5842 and the big figure would be 1.58.  The fourth and fifth digits measure the number of

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    What is Forex Arbitrage?

    Forex arbitrage is a trading strategy where a speculator attempts to make a profit by exploiting the inefficiency in currency pairs.  This inefficiency is always self correcting, so the window of opportunity for profiting from the spread is very limited.

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    Base Currency Definition

    What is the base currency?

    The base currency is the first currency quoted in a currency pair.  The base currency is referred to as the parent currency and exchange rates are quoted in per unit of the base currency.  The base currency is the more valuable currency.  Therefore in the EUR/USD currency pair, the Euro is more valuable than the

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    Forex Trading Hours

    What are the Forex trading hours?

    The forex trading hours are 5 days a week, 24 hours a day.  The forex market is able to trade 24 hours a day since there is no physical location of the exchange.  The forex market is rather a network of computers and large banking institutions that provide the marketplace for the forex market.  Trading for the week begins at Sunday 5pm EST and runs through Friday 4pm EST.

    4 Major Forex Trading Blocks

    There are four primary trading blocks for the forex:

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    What is Forex Mini Trading?

    A forex mini account is a trading account approved to buy and sell a currency pair in trading lots of one tenth the normal size.  The standard forex contract sizes are 100,000 units.  A forex mini account allows a trader to trade in 10,000 units.  Each pip is valued at $10 U.S., so with a forex mini account you can trade as small as $1.   

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