What is Forex?
Forex is the acronym for "currency market", afterward known as the Portuguese currency market. The currency is the financial flavor afterward the largest dimension and the highest liquidity in the world, taking into consideration more than 4 billion dollars a morning in trailer movements. The size of the foreign argument broadcast is such that the trading volume of the new York amassing clash does not even reach 2% of those realized in the currency.
Currency pairs and difference of opinion rate
In forex trading subsequently currency pairs (cryptomoedas and more). By analyzing the EUR / USD difference of opinion rate, you can look how many USD (listed or additional currency) you dependence to purchase 1 EUR (base currency).
Therefore, if the difference of opinion rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the argument rate increases, it means that the base currency has strengthened against the supplementary currency. If the difference of opinion 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 broadcast is considered the most liquid broadcast in the world. Basically, this means that you can purchase any currency whenever you want, as long as the spread around is open.
- vigorous and decentralized: the foreign exchange make public is a working and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, have emotional impact the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading on the foreign row publicize is the number of hours of operation; The foreign row shout from the rooftops is door 24 hours a day, five functioning days a week, which makes it entirely handsome for many traders.
What are the factors that enactment the foreign argument market?
As currency transactions are immediate, the price of foreign disagreement is affected by the decree of supply and demand 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 decree the price of a currency by adopting certain economic events and announcements. For example, a rise in concentration rates in the US Federal superiority would bump the value of the US currency.
- Political, social and economic events. If Forex participants take that a social event, can involve the political, economic or natural enlargement or fall in a currency, they will change the shout out price gone its operations that meet the expense of alter and demand for the currency concerned.
The more people undertake that a consistent trend is followed, the more it will do something puff prices, as this will reflect announce sentiment.
Recent major actions such as Brexit or the US elections directly and immediately influenced the value of currencies.
Reports of economic and social organizations. Debt analysis past the IMF, large loans from the EU or the health of the industry in a utter country (especially the big powers), as competently as data on unemployment and inflation, yet have the funds for a more translucent vision of what might happen on the markets and in the economy, for that reason it then has a rather accentuated weight under the currency.
What should I realize next I trade in the currency?
Forex Trading always involves trading afterward a currency pair. For example, if you think the pound sterling (GBP) will value next to the dollar, you should purchase 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 charge is called the purchase position, which means that the trader wants to buy the base currency (GBP) and sell the additional currency. In the second, the operator would retrieve a sales tilt to sell the pound sterling (GBP), the base currency.
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