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The Central Banks of the G-7 Countries

In the wake of World War II, both Germany and Japan were helped to develop new financial systems. Both countries created central banks that were fundamentally similar to the Federal Reserve of USA. Along the line, their scope was customized to their domestic needs and they diverged from their model.

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The Federal Reserve System of the USA

Like the other central banks, the Federal Reserve of the USA affects the foreign exchange markets in three general areas:

the discount rate;
the money market instruments;
foreign exchange operations.

For the foreign exchange operations most significant are repurchase agreements to sell the same security back at the same price at a predetermined date in the future (usually within 15 days), and at a specific rate of interest. This arrangement amounts to a temporary injection of reserves into the banking system. The impact on the foreign exchange market is that the dollar should weaken. The repurchase agreements may be either customer repos or system repos.

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Forex Profitability

It doesn’t take a financial genius to figure out that the biggest attraction of any market, or any financial venture for that matter, is the opportunity of profit. In the Forex market, profitability is expressed in a number of ways.

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The Ratio between Minimal Lot Size, Trade Size and Leverage

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Fundamentally, the minimal lot size for a trade is $10,000. Thus the leverage limitations are set according to the amount you choose to trade, for instance, for the above lot of 10,000$ for a trade size of 25$ the maximum leverage is 400, for 50 the leverage is 200 and for trade of 100$ we have the leverage of 100.

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Tactical Usage of Leverage in Forex

If you’ve been at all exposed to the world of Forex you’ve probably heard the word “Leverage” being tossed around. But what exactly is “Leverage”?

Leverage is a very important part of Forex trading, and it’s critical that you know exactly how it works and how to use it. It is the term Forex traders use to refer to the ratio of invested amount related to the trade's actual value.

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