What is Forex?
Forex is the acronym for "currency market", as well as known as the Portuguese currency market. The currency is the financial reveal in the manner of the largest dimension and the highest liquidity in the world, in the manner of more than 4 billion dollars a day in trailer movements. The size of the foreign difference of opinion promote is such that the trading volume of the new York gathering clash does not even accomplish 2% of those realized in the currency.
Currency pairs and quarrel rate
In forex trading similar to currency pairs (cryptomoedas and more). By analyzing the EUR / USD squabble rate, you can see how many USD (listed or subsidiary currency) you infatuation to buy 1 EUR (base currency).
Therefore, if the dispute rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the quarrel rate increases, it means that the base currency has strengthened against the auxiliary 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 shout from the rooftops is considered the most liquid puff in the world. Basically, this means that you can purchase any currency whenever you want, as long as the spread around is open.
- functioning and decentralized: the foreign dispute shout from the rooftops is a working and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, have emotional impact the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading upon the foreign difference of opinion puff is the number of hours of operation; The foreign difference of opinion broadcast is admission 24 hours a day, five working days a week, which makes it no question handsome for many traders.
What are the factors that law the foreign argument market?
As currency transactions are immediate, the price of foreign squabble is affected by the be in of supply and request and, consequently, by speculation.
Thus, stability and the political and economic events, as well 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 do its stuff the price of a currency by adopting sure economic measures and announcements. For example, a rise in raptness rates in the US Federal unfriendliness would layer the value of the US currency.
- Political, social and economic events. If Forex participants undertake that a social event, can pretend to have the political, economic or natural enlargement or decrease in a currency, they will amend the make known price taking into account its operations that offer bend and request for the currency concerned.
The more people resign yourself to that a consistent trend is followed, the more it will put on an act push prices, as this will reflect present sentiment.
Recent major actions such as Brexit or the US elections directly and suddenly 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 resolution country (especially the huge powers), as without difficulty as data on unemployment and inflation, yet have enough money a more translucent vision of what might happen upon the markets and in the economy, consequently it moreover has a rather accentuated weight below the currency.
What should I reach following I trade in the currency?
Forex Trading always involves trading past a currency pair. For example, if you think the pound sterling (GBP) will value adjacent 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 case is called the purchase 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 direction to sell the pound sterling (GBP), the base currency.
Comments
Post a Comment