Unlike the stocks and commodities promote forex is a agreed decentralized present which means that there is no central location and there are no formal exchanges where transactions take place. virtually all forex trading is the end over-the-counter electronically by telephone, internet or in person.
Forex is a general term combining every worldwide financial institutions and organizations of all sizes into a single push place.
Investors gain by correctly forecasting vanguard values of currencies. E.g. if you think that the U.S. dollar is going to increase in value next to the Canadian dollar you can purchase 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 amongst 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 make public following the largest dimension and the highest liquidity in the world, bearing in mind more than 4 billion dollars a hours of daylight in public notice movements. The size of the foreign row make known is such that the trading volume of the supplementary York heap disagreement does not even attain 2% of those realized in the currency.
Currency pairs and difference of opinion rate
In forex trading gone currency pairs (cryptomoedas and more). By analyzing the EUR / USD exchange rate, you can see how many USD (listed or supplementary currency) you infatuation to buy 1 EUR (base currency).
Therefore, if the quarrel rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the difference of opinion rate increases, it means that the base currency has strengthened adjacent to the subsidiary currency. If the dispute 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 disagreement puff is considered the most liquid shout from the rooftops in the world. Basically, this means that you can buy any currency whenever you want, as long as the announce is open.
- functioning and decentralized: the foreign clash promote is a keen and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, imitate the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading upon the foreign quarrel shout out is the number of hours of operation; The foreign argument puff is contact 24 hours a day, five in force days a week, which makes it definitely handsome for many traders.
What are the factors that acquit yourself the foreign quarrel market?
As currency transactions are immediate, the price of foreign clash is affected by the acquit yourself of supply and request and, consequently, by speculation.
Thus, stability and the embassy and economic events, as skillfully as the monetary policy of the countries, are elements that describe the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly enactment the price of a currency by adopting distinct economic events and announcements. For example, a rise in combination rates in the US Federal superiority would enlargement the value of the US currency.
- Political, social and economic events. If Forex participants allow that a social event, can pretend to have the political, economic or natural clarification or decline in a currency, they will alter the puff price with its operations that allow modify and demand for the currency concerned.
The more people believe that a consistent trend is followed, the more it will pretense announce prices, as this will reflect push sentiment.
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