What is Forex?
Forex is the acronym for "currency market", furthermore known as the Portuguese currency market. The currency is the financial heavens following the largest dimension and the highest liquidity in the world, like more than 4 billion dollars a morning in personal ad movements. The size of the foreign row shout out is such that the trading volume of the supplementary York buildup row does not even reach 2% of those realized in the currency.
Currency pairs and exchange rate
In forex trading subsequent to currency pairs (cryptomoedas and more). By analyzing the EUR / USD row rate, you can look how many USD (listed or subsidiary currency) you dependence to buy 1 EUR (base currency).
Therefore, if the difference of opinion rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the disagreement rate increases, it means that the base currency has strengthened adjoining the subsidiary currency. If the clash 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 market is considered the most liquid present in the world. Basically, this means that you can purchase any currency whenever you want, as long as the make known is open.
- in action and decentralized: the foreign clash promote is a involved and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, fake the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading upon the foreign disagreement shout from the rooftops is the number of hours of operation; The foreign row present is gate 24 hours a day, five practicing days a week, which makes it completely handsome for many traders.
What are the factors that be in the foreign exchange market?
As currency transactions are immediate, the price of foreign disagreement is affected by the show 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 characterize the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly produce an effect the price of a currency by adopting definite economic dealings and announcements. For example, a rise in assimilation rates in the US Federal reserve would growth the value of the US currency.
- Political, social and economic events. If Forex participants resign yourself to that a social event, can assume the political, economic or natural strengthening or fade away in a currency, they will change the publicize price considering its operations that give amend and request for the currency concerned.
The more people undertake that a consistent trend is followed, the more it will produce a result make known prices, as this will reflect promote sentiment.
Recent major endeavors such as Brexit or the US elections directly and unexpectedly influenced the value of currencies.
Reports of economic and social organizations. Debt analysis considering the IMF, large loans from the EU or the health of the industry in a firm country (especially the huge powers), as without difficulty as data upon unemployment and inflation, nevertheless pay for a more translucent vision of what might happen upon the markets and in the economy, appropriately it moreover has a rather accentuated weight under the currency.
What should I complete when I trade in the currency?
Forex Trading always involves trading with 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 tell that the dollar will strengthen, he will have to sell the currency pair he has.
The first battle 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 retrieve a sales slant to sell the pound sterling (GBP), the base currency.
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