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By
www.TheForexNittyGritty.com
Trade Foreign
Currencies
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
People trade foreign currencies to two
distinctly different reasons.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
First of all, companies that buy
products from foreigners pay with
foreign currencies.
Before We Continue…
Click the links below to get your
FREE training materials.
Free Weekly Investing Webinars
Don’t miss these free training events!
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Forex Conspiracy Report
Read every word of this report!
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http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
They trade foreign currencies to make
payment and often buy currency
options to hedge currency risk.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
These traders limit themselves to the
currencies involved, their own and that
of the company from whom they are
going to purchase a foreign product.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
On the other hand currency speculators
trade foreign currencies for profit.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
They pick and choose currency pairs to
trade based on market volatility and
their analysis of fundamental and
technical factors.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
In each case success comes from
careful analysis and timely execution of
trades.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Hedging Risk in
International
Business
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Forex trading and currency risk are
inextricably intertwined.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Currency risk is a form of risk that
arises from the change in price of one
currency against another.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Whenever investors or companies have
assets or business operations across
national borders, they face currency
risk if their positions are not hedged.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
The basic need for a Forex market
comes from the need to do business
across national boundaries.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
A translation risk is the risk that the
Forex market rates will change
between writing a contract and final
payment.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
A Chinese ship building company
writes a contract for payment in dollars
for building a ship.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Then the company buys what it needs
to build the ship and it pays its workers
in Yuan.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
The value of the Yuan goes up and the
dollar goes down. The company ends
up losing money on the sale.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
An American high tech company
agrees to pay a German company in
Euros for each dosage for use of its
patent on a genetically engineered
cancer therapy.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
The Euro goes up and dollar goes
down. The American company’s
payment in dollars by the HMO’s and
Medicare is frozen and the company
cannot afford to make and sell the drug
in question.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Companies commonly buy currency
options in order to set a price that they
will pay no matter how much the
relative value of a currency pair
changes.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Picking the Most
Profitable Currency
Pair
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Currency speculators are not tied to a
given currency pair.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
They will scout out market volatility,
analyze fundamentals and track market
sentiment with technical indicators.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Then they will place timely trades in
order to profit from the inefficiency of a
moving market.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
The point of speculating is not to hedge
risk but rather to make money trading
currencies.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Technical analysis tools such as
Japanese Candlesticks help traders
anticipate price fluctuations based on
changes in market sentiment.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Sound fundamental analysis tells a
trader where the market will eventually
end up so that he can place his trade
and simply wait for the market to come
to him.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
As with all business, showing up every
day and learning the appropriate skill
sets are what lead to success.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
And, as always, do not trade when you
are too tired to think.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
Check out every tip that you receive.
http://www.theforexnittygritty.com/forex/trade-
foreign-currencies
And when you trade currencies stay out
of any and all trades that you do not
understand.

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Trade Foreign Currencies