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.
Tuesday, June 9, 2009
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%
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
(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
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.
Exchange Traded Fund
An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.
Exchange-traded funds (or ETFs) are Open Ended investment companies that can be traded at any time throughout the course of the day.
Exchange-traded funds (or ETFs) are Open Ended investment companies that can be traded at any time throughout the course of the day.
FUTURE EXCHANGE
A futures exchange is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
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