What is Forex?
Forex is the acronym for "currency market", in addition to known as the Portuguese currency market. The currency is the financial song in imitation of the largest dimension and the highest liquidity in the world, as soon as more than 4 billion dollars a day in flyer movements. The size of the foreign squabble push is such that the trading volume of the further York heap disagreement does not even reach 2% of those realized in the currency.
Currency pairs and difference of opinion rate
In forex trading subsequent to currency pairs (cryptomoedas and more). By analyzing the EUR / USD exchange rate, you can look how many USD (listed or secondary currency) you dependence to buy 1 EUR (base currency).
Therefore, if the exchange rate of the EUR / USD currency pair is 1.2356, this means that each euro can purchase 1.2356 dollars.
If the dispute rate increases, it means that the base currency has strengthened against the subsidiary 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 exchange promote is considered the most liquid spread around in the world. Basically, this means that you can buy any currency whenever you want, as long as the publicize is open.
- in force and decentralized: the foreign clash publicize is a committed and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, involve the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading upon the foreign disagreement announce is the number of hours of operation; The foreign argument puff is gate 24 hours a day, five operating days a week, which makes it totally handsome for many traders.
What are the factors that operate the foreign argument market?
As currency transactions are immediate, the price of foreign squabble is affected by the law of supply and request and, consequently, by speculation.
Thus, stability and the embassy and economic events, as skillfully 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 perform the price of a currency by adopting certain economic procedures and announcements. For example, a rise in interest rates in the US Federal reserve would addition the value of the US currency.
- Political, social and economic events. If Forex participants take that a social event, can put on the political, economic or natural strengthening or fade away in a currency, they will fine-tune the market price once its operations that meet the expense of amend and request for the currency concerned.
The more people admit that a consistent trend is followed, the more it will perform present prices, as this will reflect publicize sentiment.
Recent major activities such as Brexit or the US elections directly and immediately influenced the value of currencies.
Reports of economic and social organizations. Debt analysis next the IMF, large loans from the EU or the health of the industry in a unlimited country (especially the huge powers), as with ease as data on unemployment and inflation, yet manage to pay for a more translucent vision of what might happen on the markets and in the economy, suitably it as well as has a rather accentuated weight below the currency.
What should I attain in the manner of I trade in the currency?
Forex Trading always involves trading similar to 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 lawsuit 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 read a sales perspective to sell the pound sterling (GBP), the base currency.
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