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 Components of a FOREX deal
 
 3/2/2007 11:57:19 PM
User is offlinefrancesco
66 posts
www.tescari.com




Components of a FOREX deal
A FOREX deal is a contract agreed upon between the trader and the market-maker (i.e. the trading platform). The contract is comprised of the following components:
 
- The currency pairs (which currency to buy; which currency to sell)
- The principal amount (or “face”, or “nominal”: the amount of currency involved in the deal)
- The rate (the agreed exchange rate between the two currencies).
 
Time frame is also a factor in some deals, but this chapter focuses on Day-Trading (Similar to “Spot” or “Current Time” trading), in which deals have alifespan of no more than a single full day. Thus, time frame does not play into the equation. Note, however, that deals can be renewed (“rolled-over”) to the next day for a limited period of time.
 
The FOREX deal, in this context, is therefore an obligation to buy and sell a specified amount of a particular pair of currencies at a pre-determined exchange rate.
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