What is Forex?
Forex is the acronym for "currency market", as well as known as the Portuguese currency market. The currency is the financial broadcast later the largest dimension and the highest liquidity in the world, gone more than 4 billion dollars a day in classified ad movements. The size of the foreign row broadcast is such that the trading volume of the additional York deposit exchange does not even accomplish 2% of those realized in the currency.
Currency pairs and exchange rate
In forex trading once currency pairs (cryptomoedas and more). By analyzing the EUR / USD disagreement rate, you can look how many USD (listed or auxiliary currency) you craving to purchase 1 EUR (base currency).
Therefore, if the disagreement 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 against the supplementary 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 squabble present is considered the most liquid make public in the world. Basically, this means that you can purchase any currency whenever you want, as long as the publicize is open.
- vigorous and decentralized: the foreign squabble puff is a working and decentralized market, meaning that any trader can invest anywhere in the world and, consequently, impinge on the price trend of a pair.
- 24/5 hours: A key factor that characterizes trading on the foreign squabble promote is the number of hours of operation; The foreign dispute make public is edit 24 hours a day, five in action days a week, which makes it certainly attractive for many traders.
What are the factors that ham it up the foreign row market?
As currency transactions are immediate, the price of foreign argument is affected by the feint of supply and demand and, consequently, by speculation.
Thus, stability and the diplomatic and economic events, as skillfully 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 behave the price of a currency by adopting distinct economic proceedings and announcements. For example, a rise in engagement rates in the US Federal superiority would deposit the value of the US currency.
- Political, social and economic events. If Forex participants recognize that a social event, can pretend to have the political, economic or natural further details or fall in a currency, they will correct the push price gone its operations that manage to pay for correct and demand for the currency concerned.
The more people give a positive response that a consistent trend is followed, the more it will play a role puff prices, as this will reflect puff sentiment.
Recent major happenings such as Brexit or the US elections directly and quickly influenced the value of currencies.
Reports of economic and social organizations. Debt analysis subsequent to the IMF, large loans from the EU or the health of the industry in a unmovable country (especially the big powers), as well as data upon unemployment and inflation, yet allow a more translucent vision of what might happen on the markets and in the economy, consequently it next has a rather accentuated weight below the currency.
What should I pull off subsequent to I trade in the currency?
Forex Trading always involves trading following a currency pair. For example, if you think the pound sterling (GBP) will value neighboring the dollar, you should purchase 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 achievement is called the buy position, which means that the trader wants to purchase the base currency (GBP) and sell the auxiliary currency. In the second, the operator would entre a sales turn to sell the pound sterling (GBP), the base currency.
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