FOREX

Fixed To Floating
Once upon a time, exchange rates were fixed, supported at levels by central banks. But as world trade and world tourism flourished, the pressures on fixed exchange rates became extreme. The only solution was a government-dictated revaluation or devaluation of a currency, usually by several percentage points. Despite these increasingly frequent realignments, trade kept growing and the pressures on inter-currency exchange rates continued. Eventually, governments realised that allowing currencies to float freely and find their own levels would overcome many of the problems of fixed exchange rates.

New Market
With floating currency exchange rates, it was quickly realised that currency trading presented an opportunistic market, and major institutions soon began to trade. Currency trading then spread from multinational corporations and international banks – who needed foreign exchange to trade with overseas partners – until today’s markets where FOREX trading is also available to the retail investor.

Portfolio Diversification
Foreign exchange markets represent a viable diversification tool to those investors with a classic equities and derivative portfolio. Cash is one asset class that must be present in any well diversified portfolio. Whether it is in Sterling, US Dollars or Euro, it is a must!

Gearing
Trading in currency implies buying or selling one currency against another expecting the exchange rate to move in ones favour. Since, generally, currency fluctuations are relatively small, one can use gearing to control a large amount of foreign currency on a considerably smaller deposit. 100 times gearing is perfectly usual in FOREX trading. For example, one could control a million dollar trade with just a $10,000 stake.

Liquidity
Around the world, there’s US$ 1.5 trillion a day of FOREX trading, making currency the most liquid of all investment markets. Trading takes place 24 hours a day, six days a week. The largest FX markets – and therefore the most liquid and the most commonly quoted – are Euro/Dollar (€/$), Dollar/Yen ($/¥), and Sterling/Dollar (often referred to as Cable) (£/$).

Delivery
As an alternative to trading, our services also provide opportunities for currency delivery. Should one require currency conversion – say converting Sterling to Euro – YTM Stockbrokers are at the heart of the financial markets to help achieve the best possible rates available.

Private Investors
Successful FOREX traders look for forthcoming events which will affect particular currency rates. YTM Stockbrokers we are well placed to advise you when market sentiment looks like driving exchange rates in given directions. Our aim is to advise our clients immediately as economic events affect the FOREX markets.

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