What is Forex?
Forex is the acronym for "currency market", plus known as the Portuguese currency market. The currency is the financial appearance in the same way as the largest dimension and the highest liquidity in the world, gone more than 4 billion dollars a hours of daylight in advertisement movements. The size of the foreign row shout from the rooftops is such that the trading volume of the further York gathering disagreement does not even reach 2% of those realized in the currency.
Currency pairs and exchange rate
In forex trading past currency pairs (cryptomoedas and more). By analyzing the EUR / USD argument rate, you can look how many USD (listed or secondary currency) you compulsion 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 clash rate increases, it means that the base currency has strengthened adjacent to the supplementary 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 clash present 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 promote is open.
- working and decentralized: the foreign argument publicize is a keen and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, put on the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading upon the foreign row shout from the rooftops is the number of hours of operation; The foreign row shout out is retrieve 24 hours a day, five dynamic days a week, which makes it extremely attractive for many traders.
What are the factors that act out the foreign disagreement market?
As currency transactions are immediate, the price of foreign dispute is affected by the put-on of supply and request and, consequently, by speculation.
Thus, stability and the political and economic events, as with ease 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 accomplishment the price of a currency by adopting positive economic proceedings and announcements. For example, a rise in immersion rates in the US Federal detachment would addition the value of the US currency.
- Political, social and economic events. If Forex participants agree to that a social event, can have an effect on the political, economic or natural magnification or decline in a currency, they will tweak the announce price in imitation of its operations that present regulate and request for the currency concerned.
The more people assume that a consistent trend is followed, the more it will undertaking publicize prices, as this will reflect push sentiment.
Recent major endeavors such as Brexit or the US elections directly and immediately influenced the value of currencies.
Reports of economic and social organizations. Debt analysis when the IMF, large loans from the EU or the health of the industry in a resolution country (especially the big powers), as well as data upon unemployment and inflation, yet have enough money a more translucent vision of what might happen upon the markets and in the economy, in view of that it afterward has a rather accentuated weight below the currency.
What should I pull off with I trade in the currency?
Forex Trading always involves trading behind a currency pair. For example, if you think the pound sterling (GBP) will value neighboring 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 court case 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 admission a sales point of view to sell the pound sterling (GBP), the base currency.
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