Unlike the stocks and commodities present forex is a completely decentralized puff which means that there is no central location and there are no formal exchanges where transactions put up with place. virtually every forex trading is over and done with over-the-counter electronically by telephone, internet or in person.
Forex is a general term combining all worldwide financial institutions and organizations of all sizes into a single announce place.
Investors gain by correctly forecasting later values of currencies. E.g. if you think that the U.S. dollar is going to buildup in value adjoining the Canadian dollar you can buy the USDCAD currency pair. If you are right and the value of the U.S. dollar increases you can sell the pair for a well along price.
Your profit is the difference between the buy price and the sale price multiplied by the number of lots traded - trade size - or vice versa if you sell the pair short.
What is Forex?
Forex is the acronym for "currency market", with known as the Portuguese currency market. The currency is the financial flavor in the same way as the largest dimension and the highest liquidity in the world, considering more than 4 billion dollars a daylight in announcement movements. The size of the foreign quarrel announce is such that the trading volume of the new York addition squabble does not even accomplish 2% of those realized in the currency.
Currency pairs and clash rate
In forex trading later than currency pairs (cryptomoedas and more). By analyzing the EUR / USD quarrel rate, you can look how many USD (listed or secondary currency) you infatuation to purchase 1 EUR (base currency).
Therefore, if the argument rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the dispute rate increases, it means that the base currency has strengthened next to the subsidiary currency. If the quarrel rate eventually decreases, it means the opposite.
The characteristics of the Forex or Forex market
- Liquidity: Because of the $ 5 billion that circulates daily, the foreign difference of opinion broadcast is considered the most liquid promote in the world. Basically, this means that you can purchase any currency whenever you want, as long as the publicize is open.
- effective and decentralized: the foreign row spread around is a involved and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, put on the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading on the foreign exchange shout out is the number of hours of operation; The foreign quarrel publicize is retrieve 24 hours a day, five full of life days a week, which makes it agreed handsome for many traders.
What are the factors that put-on the foreign row market?
As currency transactions are immediate, the price of foreign disagreement is affected by the performance of supply and demand and, consequently, by speculation.
Thus, stability and the embassy and economic events, as well as the monetary policy of the countries, are elements that characterize the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly act out the price of a currency by adopting determined economic measures and announcements. For example, a rise in captivation rates in the US Federal unfriendliness would growth the value of the US currency.
- Political, social and economic events. If Forex participants bow to that a social event, can touch the political, economic or natural extension or terminate in a currency, they will correct the publicize price in imitation of its operations that meet the expense of correct and request for the currency concerned.
The more people tolerate that a consistent trend is followed, the more it will put it on publicize prices, as this will reflect publicize sentiment.
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