Futures

The value of a currency is vital for trade on an international level.  If there were no exchange rates, we would not be able to trade internationally.  The only way to trade for a foreign product would be barter, the trade of one product for another.  This document will briefly discuss international trade with regards to currency, the large market of trading currencies, it s risks, common concerns, and possible ways to avoid them.

The Foreign Currency Trading market is one that fluctuates constantly, with some changes being slight and others enormous.  These changes are depending on the value of both the currency one wishes to receive and the currency they are trading for it.  Changes in foreign currency futures can be attributed to  the government, supply and demand, interest rates, inflation,  and consumer expectations. Currency trading for profit can be a way to make or lose a fortune, depending on how much one has researched into the market indicators, the risks that they don’t move the way you expected, and some luck that nothing unexpected happens in the global economy to shake the market from what you predicted.

Investing in Foreign Currency

One can make money in the Foreign exchange market by investing in a currency that they think will rise in value (appreciate) compared to the currency that they use in their daily life (i.e. An American invests into the Euro, thinking it will appreciate compared to the Dollar).  For example, The People’s Republic of China is keeping its currency artificially low to keep itself globally competitive; Since 1994 it has fixed its exchange rate relative to the U.S. dollar at 8.28 Yuan = US$1.  Because the value is steady relative to the dollar, there isn’t much speculation into the Chinese currency relative to the Dollar.  However, there are complaints from other nations about this, and as the size of China as an economic power continues to grow; its currency will also eventually have to appreciate. U.S. Treasury Secretary Timothy Geithner points out “…the undervaluation of the [Chinese] yuan is the source of tensions in the world economy… if we want to avoid creating the conditions for a new crisis, China will need to accelerate the appreciation process.” So, one should keep an eye on the Yuan as a possibility for a large profit in terms of currency exchange rate.

There are those who help one speculate in the currency market and can make one make decisions with more assurance and knowledge behind their choices.  A good checklist of things to go over and make sure you do is posted by Michael Duane Archer.

Tips for Currency Trading

• Observe before you dive headfirst into investing in forex (foreign exchange)
• Read reviews of brokers to find the good and bad
• Find a broker-dealer who fits your style and offers the tools you need
• Open demo accounts  to compare the services offered, and discover which broker you prefer

The forex market is very risky and should not be entered into half-heartedly. It offers a great chance to make a considerable profit to those who are willing to put in the time.  For additional information on the forex with regard to U.S. laws of trading.

With the global market becoming more and more interconnected, investing in foreign currency futures can be a lucrative choice.  The foreign currency market is the largest market in the world, and is known for being fast paced and volatile. The industry has regulation here in the U.S., as well as government sites to inform potential investors of various scams.  Neutral sites fill similar needs, warning of some opportunities to be scams, others to be a great opportunity.  Assuming one finds a legitimate.

Commodity Futures Trading Commission

One of the most important of the government agencies in relation to foreign currency trading is the Commodity Futures Trading Commission (CFTC). The CFTC, under law has jurisdiction and authority to investigate and take legal action to close down a wide assortment of unregulated firms offering or selling foreign currency futures and options contracts to the general public.  It also has the power to investigate and prosecute foreign currency fraud occurring in its registered firms and their affiliates.

Office of the Comptroller of the Currency

Another important agency for foreign currency is The Office of the Comptroller of the Currency (OCC).  The OCC began in 1863 as a bureau of the U.S. Department of the Treasury.  OCC is the entity that charters, regulates, and supervises all national banks.  The OCC is located in Washington, D.C., with four additional district offices, plus an office in London to supervise the international activities of national banks.  It regulates national banks by “rules, legal interpretations, and corporate decisions concerning banking, bank investments, bank community development activities, and other aspects of bank operations” which national banks must follow.

OCC Objectives

• Ensure the safety and soundness of the national banking system
• Foster competition by allowing banks to offer new products and services
• Improve the efficiency and effectiveness of OCC supervision, including reducing regulatory burden
• Ensure fair and equal access to financial services for all Americans

The market for foreign currency trading is worldwide, with the exchange rate always available at one of the three main centers of trading—United Kingdom, United States, and Japan.

CME

The CME can also provide information into the foreign currency market that on understanding of foreign currency trading for profit, the risks, rewards, factors of concern as well as perspectives ranging from the Marco-environment to focuses on emerging markets.  CME Group also provides links to various articles by various authors on the subject.

Books

There are many books on the matter of foreign exchange futures, the risks, rewards, and what to watch out for from scams in the field.  A book for someone hoping to make a more informed decision would be ‘Foreign Currency Trading: From the Fundamentals to the Fine Points’ that can be found on Amazon.  For other books on the subject, one should visit the Library of Congress, and search its extensive library of books for one, there are enough to fit any specific point of interest one may have in the area of foreign exchanges.