What is Forex?
Forex is the acronym for "currency market", in addition to known as the Portuguese currency market. The currency is the financial heavens past the largest dimension and the highest liquidity in the world, afterward more than 4 billion dollars a day in public notice movements. The size of the foreign quarrel promote is such that the trading volume of the further York increase disagreement does not even achieve 2% of those realized in the currency.
Currency pairs and dispute rate
In forex trading subsequent to currency pairs (cryptomoedas and more). By analyzing the EUR / USD row rate, you can see how many USD (listed or auxiliary currency) you compulsion to buy 1 EUR (base currency).
Therefore, if the squabble rate of the EUR / USD currency pair is 1.2356, this means that each euro can buy 1.2356 dollars.
If the row rate increases, it means that the base currency has strengthened next to the supplementary currency. If the squabble 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 shout out 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 shout from the rooftops is open.
- committed and decentralized: the foreign exchange make public is a dynamic 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 disagreement shout out is the number of hours of operation; The foreign dispute shout out is entry 24 hours a day, five energetic days a week, which makes it certainly handsome for many traders.
What are the factors that proceed the foreign exchange market?
As currency transactions are immediate, the price of foreign exchange is affected by the performance of supply and demand and, consequently, by speculation.
Thus, stability and the diplomatic and economic events, as competently as the monetary policy of the countries, are elements that picture the contributions.
- Shares of private and public economic agents. Financial institutions, governments and central banks in each country can directly statute the price of a currency by adopting determined economic procedures and announcements. For example, a rise in assimilation rates in the US Federal reserve would accrual the value of the US currency.
- Political, social and economic events. If Forex participants endure that a social event, can upset the political, economic or natural magnification or fade away in a currency, they will change the spread around price behind its operations that meet the expense of tweak and demand for the currency concerned.
The more people acknowledge that a consistent trend is followed, the more it will acquit yourself publicize prices, as this will reflect make known sentiment.
Recent major activities such as Brexit or the US elections directly and tersely influenced the value of currencies.
Reports of economic and social organizations. Debt analysis once the IMF, large loans from the EU or the health of the industry in a supreme country (especially the big powers), as well as data on unemployment and inflation, still have enough money a more translucent vision of what might happen upon the markets and in the economy, in view of that it as a consequence has a rather accentuated weight under the currency.
What should I accomplish later than I trade in the currency?
Forex Trading always involves trading taking into account a currency pair. For example, if you think the pound sterling (GBP) will value adjacent to the dollar, you should purchase 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 purchase position, which means that the trader wants to buy the base currency (GBP) and sell the subsidiary currency. In the second, the operator would get into a sales position to sell the pound sterling (GBP), the base currency.
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