What is Forex?
Forex is the acronym for "currency market", moreover known as the Portuguese currency market. The currency is the financial vent behind the largest dimension and the highest liquidity in the world, gone more than 4 billion dollars a morning in poster movements. The size of the foreign disagreement spread around is such that the trading volume of the supplementary York growth disagreement does not even achieve 2% of those realized in the currency.
Currency pairs and exchange rate
In forex trading when currency pairs (cryptomoedas and more). By analyzing the EUR / USD clash rate, you can look how many USD (listed or auxiliary currency) you compulsion 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 exchange rate increases, it means that the base currency has strengthened adjacent to the additional currency. If the exchange 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 argument publicize is considered the most liquid announce in the world. Basically, this means that you can purchase any currency whenever you want, as long as the spread around is open.
- operating and decentralized: the foreign squabble announce is a functional 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 row spread around is the number of hours of operation; The foreign clash market is entry 24 hours a day, five full of zip days a week, which makes it extremely handsome for many traders.
What are the factors that ham it up the foreign clash market?
As currency transactions are immediate, the price of foreign quarrel is affected by the piece of legislation of supply and request and, consequently, by speculation.
Thus, stability and the diplomatic and economic events, as skillfully 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 discharge duty the price of a currency by adopting determined economic events and announcements. For example, a rise in immersion rates in the US Federal unfriendliness would growth the value of the US currency.
- Political, social and economic events. If Forex participants understand that a social event, can involve the political, economic or natural clarification or fall in a currency, they will modify the broadcast price subsequently its operations that provide alter and demand for the currency concerned.
The more people bow to that a consistent trend is followed, the more it will play in market prices, as this will reflect promote sentiment.
Recent major endeavors such as Brexit or the US elections directly and snappishly influenced the value of currencies.
Reports of economic and social organizations. Debt analysis later the IMF, large loans from the EU or the health of the industry in a resolved country (especially the big powers), as capably as data upon unemployment and inflation, nevertheless offer a more translucent vision of what might happen on the markets and in the economy, thus it along with has a rather accentuated weight under the currency.
What should I attain with I trade in the currency?
Forex Trading always involves trading later than 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, 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 dogfight is called the purchase position, which means that the trader wants to purchase the base currency (GBP) and sell the auxiliary currency. In the second, the operator would retrieve a sales outlook to sell the pound sterling (GBP), the base currency.
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