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July 8, 2024 No Comments

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Can I trade a currency when its main market is closed?

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A: In the forex market, currencies from all over the world can be traded at all times of the day. The forex market is very liquid, and the increased availability of advanced technology and information processing has only increased the number of participants. Although markets

How are Bollinger Bands® used in forex trading?

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A: Bollinger Bands are popular with technical analysts and traders in all markets, including forex. Since traders of currency look for very incremental moves to profit, recognizing volatility and trend changes quickly is essential. Bollinger Bands help by signaling changes in volatility. For generally steady

How are interest rates related to open market operations?

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A: Interest rates are indirectly affected by open market operations (OMOs). OMOs are a tool in monetary policy allowing a central bank to control the money supply in an economy. Under contractionary policy, a central bank sells securities on the open market, which reduces the

How are NDFs (non-deliverable forwards) priced

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A: The price of non-deliverable forward contracts, or NDFs, is commonly based on an interest rate parity formula used to calculate equivalent returns over the term of the contract based on the spot price exchange rate and interest rates for the two currencies involved, although

How can I trade in cross currency pairs if my forex account is denominated in U.S. dollars?

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A: The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is done on a group of currencies called the “majors”, which include the U.S. dollar, the euro, the British pound, the Japanese yen

How do central banks acquire currency reserves and how much are they required to hold?

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A: A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign exchange reserves. Reserve currencies usually also become the international pricing currencies for products traded on the global market such as oil, gold

How do companies benefit from interest rate and currency swaps?

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A: In general, both interest rate and currency swaps have the same benefits for a company. First, let’s define interest rate and currency swaps. An interest rate swap involves the exchange of cash flows between two parties based on interest payments for a particular principal

How do I convert one type of currency to another, such as dollars to pounds?

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A: Currency can be converted using an online currency exchange or it can be performed manually. To use either method, you must first look up the exchange rate using an online exchange rate calculator or by contacting your bank. The rates charged by your bank

How do I use an arbitrage strategy in forex trading?

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A: Forex arbitrage is a risk-free trading strategy that allows retail forex traders to make a profit with no open currency exposure. The strategy involves acting on opportunities presented by pricing inefficiencies in the short window they exist. This type of arbitrage trading involves the

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