Forex: What is it and how does it work? - hosting

Forex: What is it and how does it work?

The foreign exchange market or what is also referred to as "Forex" is the largest financial market in the world where a daily circulation of approximately $ 1.9 trillion - is only imagine the size of these funds! Now do not you want to join this Altrliunah industry?

Forex is the simultaneous buying of one currency and selling another currency. Currencies are traded in pairs, for example Euro US Dollar (EUR / USD) or (USD / JPY) (US dollar and Japanese yen) So basically, the forex trading is.

There are two reasons to buy and sell currencies. About 5% of the daily transactions carried out by companies and governments that buy and sell goods and services in foreign currency and therefore must convert profits made to the local currency.

The other 95% of the trading done in order to make a profit, or what might be called speculative. Often, the investors are trading based on information that they believe in the degree of association and their impact, and that is sometimes this is not right, where the market completely ignores this news.

On one side of the speculative deal on one stock trader is no one who thinks he has a superior all other information with the other side there is another trader believes that his information is correct.

For speculators, the best trading opportunities come with the most common currencies in circulation (and thus more liquid 0 meaning they cash or readily convertible to cash), these are called "major currencies". Currently, more than 85% of daily FX swaps involving the major currencies trade.

Market operates 24 hours a day actually, Forex trading begins every day in Sydney, then moves across the world with the beginning of the working day in each financial center, starts from Tokyo to London to New York. Unlike other financial markets, investors can express their reaction on the currency caused by the economic, social and political events fluctuations as soon as they happen - in real time - day or night.

Forex market is considered an internal swaps market (OTC) or "Antrpenneka." This is due to the trade-offs between two parties by phone or one of the electronic networks. Trading has no central exchange, compared with the situation in the stock and futures markets.

Understanding Offers Forex Rate

Reading View Forex prices may seem a bit confusing in the beginning. Nevertheless, it is already quite simple if you remember two things: 1) Currency placed first called the base currency) and 2 (the value of the base currency is always 1).

The US dollar is a key element in the forex market and the currency is often considered 'base' in quotations. For "major currencies", this includes USD / JPY and USD / CHF USD / CAD dollar. In these currencies and with the other, the quotations are expressed in the form of a unit of the US dollar against other currency in the pair. For example, the USD / JPY 110.01 means that the prices offered to one US dollar is equal to 110.01 Japanese yen unit.

While the US dollar is the base currency will be, when the price of the pair is moving to the top of this means high value of the dollar and the decline in other currency. If the increased offer price of the dollar yen to 113.01 previously mentioned, this means that the US dollar has become stronger now unable to buy any more of the yen by more than previously.

There are three exceptions to this rule are the British pound and the Australian dollar and the euro. In these cases you can see a quote such as GBP / USD GBP / USD 1.7366 means that one British pound equals US $ 1.7366.

In these three currency pairs where the US dollar is not the base currency, the high offer prices mean weaker US dollar, because more American dollars can now be purchased in against the British pound or the euro or the Australian dollar per share.

In other words When one goes quote currency pairs to the top, this means increasing the value of the base currency while when falling display prices, this means twice the base currency.

Currency that does not include the US dollar are called cross currency pairs, but the rules keep one. For example, the width euro 127.95 yen means that one Euro is equal to 127.95 Japanese yen.

Forex trading remorse will always see both sides display a price consists of a 'tender' 'and Q'. 'Tender' is the price at which you can sell him the base currency (at the same time buying the counter currency). As the price of 'question' is the price at which you can buy by the base currency (at the same time selling the counter currency).