What is Forex?
Forex is the acronym for "currency market", moreover known as the Portuguese currency market. The currency is the financial circulate following the largest dimension and the highest liquidity in the world, later than more than 4 billion dollars a day in classified ad movements. The size of the foreign argument shout from the rooftops is such that the trading volume of the extra York accretion quarrel does not even reach 2% of those realized in the currency.
Currency pairs and squabble rate
In forex trading considering currency pairs (cryptomoedas and more). By analyzing the EUR / USD quarrel rate, you can see how many USD (listed or secondary currency) you habit to buy 1 EUR (base currency).
Therefore, if the disagreement rate of the EUR / USD currency pair is 1.2356, this means that each euro can purchase 1.2356 dollars.
If the quarrel rate increases, it means that the base currency has strengthened adjoining the secondary currency. If the row 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 puff is considered the most liquid promote in the world. Basically, this means that you can buy any currency whenever you want, as long as the market is open.
- energetic and decentralized: the foreign dispute publicize is a functioning and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, imitate the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading on the foreign difference of opinion publicize is the number of hours of operation; The foreign argument push is way in 24 hours a day, five committed days a week, which makes it certainly handsome for many traders.
What are the factors that fake the foreign disagreement market?
As currency transactions are immediate, the price of foreign squabble is affected by the operate of supply and request and, consequently, by speculation.
Thus, stability and the embassy and economic events, as well as the monetary policy of the countries, are elements that portray the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly performance the price of a currency by adopting positive economic trial and announcements. For example, a rise in raptness rates in the US Federal remoteness would deposit the value of the US currency.
- Political, social and economic events. If Forex participants tolerate that a social event, can influence the political, economic or natural enlargement or subside in a currency, they will fine-tune the push price following its operations that find the money for amend and request for the currency concerned.
The more people say yes that a consistent trend is followed, the more it will take steps push prices, as this will reflect announce sentiment.
Recent major undertakings such as Brexit or the US elections directly and rapidly influenced the value of currencies.
Reports of economic and social organizations. Debt analysis in the manner of the IMF, large loans from the EU or the health of the industry in a utter country (especially the big powers), as capably as data on unemployment and inflation, yet meet the expense of a more translucent vision of what might happen on the markets and in the economy, fittingly it moreover has a rather accentuated weight under the currency.
What should I do in the same way as I trade in the currency?
Forex Trading always involves trading following a currency pair. For example, if you think the pound sterling (GBP) will value against 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 warfare is called the buy position, which means that the trader wants to buy the base currency (GBP) and sell the supplementary currency. In the second, the operator would entre a sales outlook to sell the pound sterling (GBP), the base currency.
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