What is Forex?
Forex is the acronym for "currency market", as well as known as the Portuguese currency market. The currency is the financial way of being subsequent to the largest dimension and the highest liquidity in the world, as soon as more than 4 billion dollars a hours of daylight in commercial movements. The size of the foreign quarrel market is such that the trading volume of the additional York growth argument does not even attain 2% of those realized in the currency.
Currency pairs and argument rate
In forex trading when currency pairs (cryptomoedas and more). By analyzing the EUR / USD disagreement rate, you can look how many USD (listed or auxiliary currency) you dependence 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 purchase 1.2356 dollars.
If the argument rate increases, it means that the base currency has strengthened neighboring the secondary currency. If the quarrel 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 shout out in the world. Basically, this means that you can purchase any currency whenever you want, as long as the shout out is open.
- energetic and decentralized: the foreign disagreement make public is a energetic 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 squabble publicize is the number of hours of operation; The foreign disagreement market is open 24 hours a day, five working days a week, which makes it utterly attractive for many traders.
What are the factors that decree the foreign row market?
As currency transactions are immediate, the price of foreign row is affected by the be in of supply and demand and, consequently, by speculation.
Thus, stability and the diplomatic and economic events, as without difficulty 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 measure the price of a currency by adopting distinct economic events and announcements. For example, a rise in interest rates in the US Federal remoteness would enlargement the value of the US currency.
- Political, social and economic events. If Forex participants understand that a social event, can concern the political, economic or natural strengthening or halt in a currency, they will regulate the push price in the same way as its operations that present regulate and demand for the currency concerned.
The more people consent that a consistent trend is followed, the more it will law promote prices, as this will reflect shout out sentiment.
Recent major goings-on such as Brexit or the US elections directly and rudely influenced the value of currencies.
Reports of economic and social organizations. Debt analysis taking into consideration the IMF, large loans from the EU or the health of the industry in a given country (especially the big powers), as well as data upon unemployment and inflation, still offer a more translucent vision of what might happen on the markets and in the economy, thus it afterward has a rather accentuated weight under the currency.
What should I get in the same way as I trade in the currency?
Forex Trading always involves trading behind a currency pair. For example, if you think the pound sterling (GBP) will value next to 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 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 admission a sales slant to sell the pound sterling (GBP), the base currency.
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