What is Forex?
Forex is the acronym for "currency market", also known as the Portuguese currency market. The currency is the financial reveal subsequently the largest dimension and the highest liquidity in the world, taking into consideration more than 4 billion dollars a hours of daylight in public notice movements. The size of the foreign argument broadcast is such that the trading volume of the supplementary York increase difference of opinion does not even attain 2% of those realized in the currency.
Currency pairs and difference of opinion rate
In forex trading in imitation of currency pairs (cryptomoedas and more). By analyzing the EUR / USD disagreement rate, you can see how many USD (listed or additional currency) you need 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 purchase 1.2356 dollars.
If the quarrel rate increases, it means that the base currency has strengthened adjoining the subsidiary 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 squabble publicize is considered the most liquid publicize in the world. Basically, this means that you can buy any currency whenever you want, as long as the present is open.
- in action and decentralized: the foreign dispute announce is a full of zip and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, move the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading on the foreign exchange puff is the number of hours of operation; The foreign difference of opinion push is entry 24 hours a day, five dynamic days a week, which makes it extremely handsome for many traders.
What are the factors that be active the foreign quarrel market?
As currency transactions are immediate, the price of foreign argument is affected by the undertaking of supply and request 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 portray the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly put it on the price of a currency by adopting positive economic events and announcements. For example, a rise in captivation rates in the US Federal reserve would buildup the value of the US currency.
- Political, social and economic events. If Forex participants admit that a social event, can involve the political, economic or natural magnification or end in a currency, they will bend the promote price considering its operations that present change and demand for the currency concerned.
The more people bow to that a consistent trend is followed, the more it will measure make known prices, as this will reflect shout from the rooftops sentiment.
Recent major actions such as Brexit or the US elections directly and hastily influenced the value of currencies.
Reports of economic and social organizations. Debt analysis in the same way as the IMF, large loans from the EU or the health of the industry in a pure country (especially the big powers), as with ease as data upon unemployment and inflation, still have enough money a more translucent vision of what might happen on the markets and in the economy, so it next has a rather accentuated weight below the currency.
What should I pull off taking into consideration I trade in the currency?
Forex Trading always involves trading in imitation of 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, 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 warfare is called the buy position, which means that the trader wants to purchase the base currency (GBP) and sell the secondary currency. In the second, the operator would way in a sales point to sell the pound sterling (GBP), the base currency.
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