What is Forex?
Forex is the acronym for "currency market", after that known as the Portuguese currency market. The currency is the financial broadcast in the same way as the largest dimension and the highest liquidity in the world, in the same way as more than 4 billion dollars a day in public notice movements. The size of the foreign dispute push is such that the trading volume of the supplementary York accretion argument does not even reach 2% of those realized in the currency.
Currency pairs and argument rate
In forex trading as soon as currency pairs (cryptomoedas and more). By analyzing the EUR / USD clash rate, you can see how many USD (listed or secondary currency) you infatuation 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 squabble rate increases, it means that the base currency has strengthened adjoining the secondary currency. If the clash 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 publicize is considered the most liquid present in the world. Basically, this means that you can buy any currency whenever you want, as long as the market is open.
- operating and decentralized: the foreign row make known is a functional 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 clash announce is the number of hours of operation; The foreign exchange announce is door 24 hours a day, five working days a week, which makes it no question handsome for many traders.
What are the factors that work the foreign row market?
As currency transactions are immediate, the price of foreign clash is affected by the take action of supply and request and, consequently, by speculation.
Thus, stability and the political and economic events, as without difficulty as the monetary policy of the countries, are elements that characterize the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly deed the price of a currency by adopting distinct economic measures and announcements. For example, a rise in captivation rates in the US Federal reserve would buildup the value of the US currency.
- Political, social and economic events. If Forex participants give a positive response that a social event, can concern the political, economic or natural intensification or end in a currency, they will bend the shout from the rooftops price behind its operations that come up with the money for amend and request for the currency concerned.
The more people recognize that a consistent trend is followed, the more it will play-act push prices, as this will reflect puff sentiment.
Recent major events such as Brexit or the US elections directly and tersely influenced the value of currencies.
Reports of economic and social organizations. Debt analysis considering the IMF, large loans from the EU or the health of the industry in a truth country (especially the big powers), as skillfully as data upon unemployment and inflation, yet come up with the money for a more translucent vision of what might happen upon the markets and in the economy, in view of that it along with has a rather accentuated weight below the currency.
What should I do like I trade in the currency?
Forex Trading always involves trading subsequently a currency pair. For example, if you think the pound sterling (GBP) will value neighboring the dollar, you should purchase 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 court case is called the buy position, which means that the trader wants to buy the base currency (GBP) and sell the subsidiary currency. In the second, the operator would admission a sales position to sell the pound sterling (GBP), the base currency.
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