What is Forex?
Forex is the acronym for "currency market", then known as the Portuguese currency market. The currency is the financial ventilate later than the largest dimension and the highest liquidity in the world, behind more than 4 billion dollars a day in trailer movements. The size of the foreign exchange puff is such that the trading volume of the additional York heap clash does not even achieve 2% of those realized in the currency.
Currency pairs and argument rate
In forex trading subsequent to currency pairs (cryptomoedas and more). By analyzing the EUR / USD clash rate, you can look how many USD (listed or additional currency) you need to buy 1 EUR (base currency).
Therefore, if the clash rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the row rate increases, it means that the base currency has strengthened adjoining the auxiliary currency. If the exchange 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 publicize is considered the most liquid push in the world. Basically, this means that you can buy any currency whenever you want, as long as the shout out is open.
- effective and decentralized: the foreign row make public is a involved and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, have an effect on the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading upon the foreign dispute puff is the number of hours of operation; The foreign row publicize is way in 24 hours a day, five functioning days a week, which makes it entirely attractive for many traders.
What are the factors that performance the foreign exchange market?
As currency transactions are immediate, the price of foreign dispute is affected by the feat of supply and request and, consequently, by speculation.
Thus, stability and the diplomatic 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 do its stuff the price of a currency by adopting definite economic procedures and announcements. For example, a rise in assimilation rates in the US Federal coldness would mass the value of the US currency.
- Political, social and economic events. If Forex participants allow that a social event, can fake the political, economic or natural augmentation or grow less in a currency, they will amend the spread around price similar to its operations that give modify and demand for the currency concerned.
The more people agree to that a consistent trend is followed, the more it will fake puff prices, as this will reflect announce sentiment.
Recent major events such as Brexit or the US elections directly and hastily influenced the value of currencies.
Reports of economic and social organizations. Debt analysis behind the IMF, large loans from the EU or the health of the industry in a unadulterated country (especially the big powers), as without difficulty as data on unemployment and inflation, yet present a more translucent vision of what might happen on the markets and in the economy, fittingly it plus has a rather accentuated weight under the currency.
What should I get as soon as I trade in the currency?
Forex Trading always involves trading as soon as a currency pair. For example, if you think the pound sterling (GBP) will value neighboring the dollar, you should buy the GBP / USD currency pair.
If, upon the contrary, we expect a devaluation, that is to say that the dollar will strengthen, he will have to sell the currency pair he has.
The first act is called the purchase position, which means that the trader wants to buy the base currency (GBP) and sell the subsidiary currency. In the second, the operator would gain access to a sales slant to sell the pound sterling (GBP), the base currency.
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