TRADING

Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order.

Most Traded Currencies

Rank
Currency
ISO 4217 code(Symbol)
% daily share(April 2007)
1
 United States dollar
USD ($)
86.3%
2
 Euro
EUR (€)
37.0%
3
 Japanese yen
JPY (¥)
16.5%
4
 Pound sterling
GBP (£)
15.0%
5
 Swiss franc
CHF (Fr)
6.8%
6
 Australian dollar
AUD ($)
6.7%
7
 Canadian dollar
CAD ($)
4.2%
8-9
 Swedish krona
SEK (kr)
2.8%
8-9
 Hong Kong dollar
HKD ($)
2.8%
10
 Norwegian krone
NOK (kr)
2.2%
11
 New Zealand dollar
NZD ($)
1.9%
12
 Mexican peso
MXN ($)
1.3%
Other


16.8%
Total


200%

Gross Domestic Productt

The gross domestic product (GDP) or gross domestic income (GDI) is one of the measures of national income and input for a given country's economy.

Determinants of FX Rates

The following theories explain the fluctuations in FX rates in a floating exchange rate regime (In a fixed exchange rate regime, FX rates are decided by its government):
(a) International parity conditions
(b) Balance of payments model
(c) Asset market model

Political conditions

Internal, regional, and international political conditions and events can have a profound effect on currency markets. Expectations of war between India and Pakistan can negatively influence the value of currencies of two nations

Market Psychology

Market psychology and trader perceptions influence the foreign exchange market in a variety of ways:
Flights to quality
Long-term trends
Buy the rumor, sell the fact
Economic numbers
Technical trading considerations

Economic Factors

These include: (a)economic policy, disseminated by government agencies and central banks, (b)economic conditions, generally revealed through economic reports, and other economic indicators.