What is Forex?
Forex is the acronym for "currency market", plus known as the Portuguese currency market. The currency is the financial manner as soon as the largest dimension and the highest liquidity in the world, subsequent to more than 4 billion dollars a daylight in public notice movements. The size of the foreign argument puff is such that the trading volume of the further York accretion quarrel does not even achieve 2% of those realized in the currency.
Currency pairs and squabble rate
In forex trading when currency pairs (cryptomoedas and more). By analyzing the EUR / USD squabble rate, you can look how many USD (listed or secondary currency) you need to purchase 1 EUR (base currency).
Therefore, if the row rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the disagreement rate increases, it means that the base currency has strengthened neighboring the secondary 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 row announce 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 shout out is open.
- energetic and decentralized: the foreign quarrel market is a keen 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 row push is the number of hours of operation; The foreign row broadcast is right to use 24 hours a day, five dynamic days a week, which makes it no question attractive for many traders.
What are the factors that play-act the foreign exchange market?
As currency transactions are immediate, the price of foreign disagreement is affected by the play a role of supply and request and, consequently, by speculation.
Thus, stability and the diplomatic and economic events, as capably 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 statute the price of a currency by adopting certain economic procedures and announcements. For example, a rise in engagement rates in the US Federal coldness would growth the value of the US currency.
- Political, social and economic events. If Forex participants say you will that a social event, can distress the political, economic or natural strengthening or end in a currency, they will bend the spread around price following its operations that give fine-tune and request for the currency concerned.
The more people believe that a consistent trend is followed, the more it will ham it up publicize prices, as this will reflect shout from the rooftops sentiment.
Recent major comings and goings such as Brexit or the US elections directly and quickly influenced the value of currencies.
Reports of economic and social organizations. Debt analysis following the IMF, large loans from the EU or the health of the industry in a unquestionable country (especially the huge powers), as with ease as data upon unemployment and inflation, still find the money for a more translucent vision of what might happen on the markets and in the economy, in view of that it along with has a rather accentuated weight under the currency.
What should I do in imitation of I trade in the currency?
Forex Trading always involves trading considering 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 say that the dollar will strengthen, he will have to sell the currency pair he has.
The first battle is called the purchase position, which means that the trader wants to buy the base currency (GBP) and sell the supplementary currency. In the second, the operator would right to use a sales point to sell the pound sterling (GBP), the base currency.
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