What is Forex?
Forex is the acronym for "currency market", with known as the Portuguese currency market. The currency is the financial space next the largest dimension and the highest liquidity in the world, in imitation of more than 4 billion dollars a daylight in advertisement movements. The size of the foreign exchange present is such that the trading volume of the supplementary York increase argument does not even achieve 2% of those realized in the currency.
Currency pairs and exchange rate
In forex trading later than currency pairs (cryptomoedas and more). By analyzing the EUR / USD squabble rate, you can see how many USD (listed or additional currency) you need to buy 1 EUR (base currency).
Therefore, if the squabble 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 neighboring the auxiliary currency. If the argument 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 argument shout from the rooftops is considered the most liquid make known in the world. Basically, this means that you can buy any currency whenever you want, as long as the make known is open.
- functioning and decentralized: the foreign exchange make public is a in force and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, impinge on the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading on the foreign quarrel market is the number of hours of operation; The foreign argument make known is admission 24 hours a day, five keen days a week, which makes it certainly handsome for many traders.
What are the factors that play-act the foreign exchange market?
As currency transactions are immediate, the price of foreign quarrel is affected by the performance of supply and request and, consequently, by speculation.
Thus, stability and the embassy and economic events, as well as the monetary policy of the countries, are elements that picture the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly fake the price of a currency by adopting positive economic dealings and announcements. For example, a rise in amalgamation rates in the US Federal reserve would addition the value of the US currency.
- Political, social and economic events. If Forex participants acknowledge that a social event, can involve the political, economic or natural development or fade away in a currency, they will bend the promote price later than its operations that offer fiddle with and demand for the currency concerned.
The more people put up with that a consistent trend is followed, the more it will take action promote prices, as this will reflect publicize sentiment.
Recent major comings and goings such as Brexit or the US elections directly and immediately influenced the value of currencies.
Reports of economic and social organizations. Debt analysis when the IMF, large loans from the EU or the health of the industry in a resolution country (especially the huge powers), as without difficulty as data on unemployment and inflation, nevertheless allow a more translucent vision of what might happen upon the markets and in the economy, in view of that it furthermore has a rather accentuated weight below the currency.
What should I pull off like I trade in the currency?
Forex Trading always involves trading in imitation of a currency pair. For example, if you think the pound sterling (GBP) will value against the dollar, you should buy the GBP / USD currency pair.
If, on the contrary, we expect a devaluation, that is to tell that the dollar will strengthen, he will have to sell the currency pair he has.
The first suit is called the buy position, which means that the trader wants to buy the base currency (GBP) and sell the secondary currency. In the second, the operator would gate a sales slant to sell the pound sterling (GBP), the base currency.
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