Internet Services Report
Foreign Exchange Trading
Michael Jeffrey
Whether we know it or not, we are all playing a role in the foreign exchange market. By just simply carrying around money in your pocket, you have become an investor of that particular nation’s currency. Foreign exchange trading, also known as Forex or FX trading, is the largest financial market in the world. Over $1.5 trillion is exchanged daily in this market which is more than all of the world’s equity and Treasury markets combined! Furthermore, unlike other economic markets, the worldwide Forex market does have a centralized location such as the stock exchange. It is a global electronic network of banks, financial institutions and individual traders who are all involved in the buying and selling of national currencies. In addition, the Forex market operates 24 hours a day which means that at any time, in any location, there are buyers and sellers, making this market the most liquid market in the world.
The Forex market works by utilizing the server-client method of networking. The client (the user that is viewing the Forex market through their web browser, Java client, or Windows client) is constantly requesting the server for an updated list of the current currency prices. The server then sends out the updated lists of the Forex currencies for the user’s program to interpret and display. It utilizes the TCP/IP protocol to achieve this.
In order to connect and operate the Forex market you must first install a program that is capable of interpreting the information. Some of these programs are: Global Forex Trading, VT Trader, and Realtime Forex. All of these programs incorporate their own programming language to interpret the Forex market and can be downloaded for free at their respective websites (www.gftforex.com, www.cmsforex.com, www.realtimeforex.com ). However, in order to provide the service, the only requirement is a web server that is capable of hosting the specified amount of information in the market at any given time. This includes IBM Webspheres, Microsoft Webservers, Sun Webservers, etc.
One example of a Forex Trading interface is Visual Trading Trader. In order to make use VT trader one must:
- Download and Install VT trader from www.cmsfx.com
- Double-click on the “Run VT Trader” desktop icon and login to the program once prompted after the update:
Here you can choose to sign in either using a demo account or a real account. A demo account is essentially for practice and does not trade real money and a real account, in contrast, involves the trading of real money.
3. After being approved, the program initializes and you are greeted with the main menu:
In this menu you can view almost everything the program has to offer. It allows you to change between different currencies under the ‘Dealing Rates’ window, the ‘VT Navigator’ which allows you to manipulate different windows, the ‘Chart Window’ which allows you to view the value of the currencies, and the multiple windows dedicated to your account.
- Once you have selected your desired trading currency pair such as EUR/USD, you can now begin to actually trade using the chart window:
In order to place a buy order, all you have to do is click on the ‘Buy’ yellow square in the top left hand corner of the chart window and specify how much of the currency you wish to buy. Alternatively, you can sell your existing currencies by clicking on the ‘Sell’ yellow square in the top left hand corner of the window. Your order is automatically displayed on the chart.
A blue candle (bar) represents a rise in price for the period of time listed. A red candle represents a decline in price for the period of time listed. In this case, each bar represents 30 minutes.
- After opening an order, you must close it once you have achieved your profit target or loss. This is done by right-clicking on the order displayed on the chart and selecting Close.
- Additionally, you can incorporate technical, mathematical indicators to help you decide in which direction the price will go, (up or down).
- You can also program the application using the VT programming language. For example, you can automate your trades so that you do not have to be at your computer at all times when a trading condition is met.
Works Cited
http://www.cmsforex.com/
Internet Services Report
Foreign Exchange Trading
Name: Michael Jeffrey
Teacher: Mr. Krnic
Class: TEE20