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brief overview of the currency world

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Berlin, Europe
 
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@dimpledbrain: Trying to answer a few of your questions:


dimpledbrain View Post
(1) where does currency trading take place...what's the difference between spot and futures?

Stocks and futures are typically traded at a centralized exchange. Your broker routes your order to the exchange, where it is executed. The FOREX markets are decentralized, which means that there are numerous electronic communication networks (ECN) which are used by banks for dealing currencies. If you trade FOREX your broker will either route your order to one of the ECNs, or will take the opposite side of your trade. Please get familiar with the different broker types: DD, NDD, STP, ECN Brokers types: ECN - STP - No Dealing Desk

The difference between FOREX and Futures: FOREX Spot is a financial commodity. It does not need any specification and can directly be transferred to your account. If you talk about futures, those are specificly designed contracts that can only be traded at a single exchange. A futures contract is a standardized forward contract where the buyer engages in buying and the seller engages in selling a commodity or a financial asset at a specific price at or after the expiry data of that contract. Your counterparty of the trade is the exchange itself. The market is highly regulated, and it is usually safer to trade futures compared to FOREX.

However, the FOREX markets attracts lots of undercapitalized traders, as FOREX retail traders offer higher leverage than the futures exchanges.


dimpledbrain View Post
(2) i presume the following are the different markets for trading currencies? what's the difference among all these and say between .comp and .euam?

CNYMYR.ABBA -> TenforeX Average Best Bid Ask
USDMYR1M.BNPF -> BNP Paribas
AUDMYR.COMP -> Composite
EURMYR.DRES -> Commerzbank
EURMYR.ECBF -> European Central Bank
AUDMYR.EUAM -> TenforeX

As the FOREX markets are decentralized, there are numerous datafeeds coming from the various networks. The data from those feeds is different, as the price discovery within the different networks will not lead to identical results. The four letters in the end of the currency pair allow you identify from which dataprovider or bank the quote is originating. For example .EUAM is the code used by TenforeX, one of the major dataproviders.

When you trade FOREX, it is important that the quote which you use comes from the same electronic network that you intend to trade. You can also use global quotes that take into account several networks.


dimpledbrain View Post
(3) my intent is not so much for active trading but to better understand the longer term fluctuations. my initial intent is more for purchasing foreign market stocks. my base currency is MYR

I would prefer trading the major currencies and crosses, as the liquidity is much better compared to currency pairs with the Malaysian ringgit.


dimpledbrain View Post
(4) where can i get more info on this and any good books to recommend?

It is difficult to find good books on FOREX. You could try for example M.D. Archer: Getting Started in Currency Trading.

Getting Started in Currency Trading, + Companion Website: Winning in Today's Market: Michael D. Archer: 9781118251652: Amazon.com: Books

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