Forex: What is it And How Does it Work?

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The foreign exchange market, also called “Forex” is the most famous and largest financial market in the world. It is a daily average turnover of U.S. $ 1900000000000, imagine that money! I do not want to join this trillion-dollar industry?
Forex is the simultaneous buying of one currency and selling another. Currencies are traded in pairs, for example Euro / US Dollar (EUR / USD) or U.S. Dollar / Japanese Yen (USD / JPY). So basically, Forex is trade.
There are two reasons for buying and selling currencies. About 5% of daily turnover of companies and governments that buy or sell products and services abroad or in foreign currencies must be converted into profits in the domestic currency.
The other 95% is trading, or whatever you call it speculation. Investors often trade information, which they believe superior, and to be relevant, even if it is not, and is ignored by the market.
To act on one side of each speculative stocks is a participant, he has better information on the other side is another participant that his knowledge is overwhelmingly of the opinion believes.
For speculators, the best trading opportunities are the most commonly traded (and therefore most liquid of its Meaning in cash or convertible debentures in cash) currencies, called “the Majors.” Now include more than 85% of daily trading transactions majors.
True 24-hour market begins, currency trading every day in Sydney, and moves around the globe as a business day begins in each financial center, first to Tokyo, London and New York. Real-time, day or night – unlike other financial markets, investors react to currency fluctuations caused by economic, social and political events as they occur.
Forex market is considered over-the-counter (OTC) or “banks” in the market. This is because the transactions are conducted by two colleagues by phone or e-network will be.Trading is not centralized on the open market compared to stocks and futures markets.
Understanding Forex Quotes
Reading a FOREX quote may seem a little confusing. However, it is actually quite simple if you remember two things: 1) The first currency listed first is the base currency and 2) the value of the currency is always 1
The dollar is an important foreign exchange market, and is commonly referred to as ‘base’ currency for quotes to consider. If the “Majors”, this includes USD / JPY, USD / CHF and USD / CAD. These and many other currencies quotes than $ 1 USD per the second currency quoted in a few words. For example, quote USD / JPY 110.01 means that the dollar is the same 110.01 Japanese yen.
When the dollar is the basic unit and currency quote goes up, it means the dollar has strengthened and has weakened the value of the currency. If the quote USD / JPY we already mentioned increased 113.01, the dollar is stronger because it now buy more yen than before.
Three exceptions to this rule are the British pound (GBP) Australian Dollar (AUD) and Euros (EUR). In these cases, you can see a quote such as GBP / USD 1.7366, meaning that one British pound to $ 1.7366.
In these three currency pairs, where the dollar is the base rate, means a weakening dollar and rising supply, as it now takes more dollars to equal one pound, euro or Australian dollar.
In other words, if the money rate continues to rise, increases the value of the base currency. The lower lending means that the base currency weakens.
Currency pairs that do not have with the U.S. dollar so-called cross currencies, but the premise is the same. For example, quote USD / JPY 127.95 means that 1 € to 127.95 Japanese yen.
When trading foreign exchange and is often bilateral, consisting of an “offer” and “offer”.“Offer” means the price at which you can sell the base currency (while buying the counter currency). “Requests” is the price at which you can buy the base currency (at the same time selling the counter currency). 


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