FOREX is a decentralized global market of all currencies that are traded around the world. This market is the largest and most liquid in the world, with a daily turnover of more than 5 billion dollars. The other stock markets in the world as a whole do not come close to this. But what does this mean? Take a closer look at forex trading and you will find interesting trading opportunities that are not available on other investments.
FOREX TRANSACTION: EVERYTHING IS IN THE EXCHANGE RATE
If you have ever traveled abroad, you have made a forex transaction. Travel to France and convert your ponds into euros. When you do this, the exchange rate between the two currencies - based on supply and demand - determines how many euros you will get for your pounds. And the exchange rate fluctuates continuously.
On Monday a pound could give you 1,19 Euros. On Tuesday 1,20 Euros. This little change may not seem like a big deal. But think about it on a larger scale. A large international company may have to pay foreign employees. Imagine what you could do to the bottom line if as in the example above, does changing one currency for another cost you more depending on when you do it?These few cents add up quickly. In both cases, you as a traveler or business owner may want to withhold your money until the exchange rate is more favorable.
FOREX OPPORTUNITIES: WHAT IS YOUR OPINION?
Just like in the stock market, you can change the currency based on what you think is worth. (or where he was going).The big difference with the Forex is that you can trade up or down with the same ease. If you think a currency will increase the value, you can buy it, if you think it will decrease the value you can sell it. With such a large market. You will find a buyer when you are selling and a seller when you are buying, it is much easier than in other markets. Perhaps you hear in the news that China is devaluing its currency to attract more foreign business to its country.
If you think the trend will continue, you could make a currency operation, selling the Chinese currency against another currency, for example, the US dollar. The more the Chinese currency depreciated against the dollar, the greater its profits.If the Chinese currency increases in value while it has its open sale position, then its losses will increase and you will want to exit the trade.
ACHIEVING OPERATIONS: HOW TO BUY AND SELL
Open your free Forex platform and start trading your opinion. EUR/USD the most traded currency in the world. The EUR, the first currency in the pair, is the basis, and the USD is the counterpart. When you see a price quoted on your platform, it is what costs one euro in dollars. You will always see two prices, one is the purchase and the other is the sale. The difference between the two is the spread. When you click on Buy or Sell you are buying or selling the pair's first currency.
Let's say you think that the EUR will increase the value against the USD, your pair is the EUR/USD if you think that the euro will fall in value against the US dollar, you sell EUR/USD. If the purchase price of EUR/USD is 0.70644 and the selling price is 0.70640, then the spread is 0.4 pips. If the transaction moves in your favor (or against) then once it covers the spread, it could be a gain or a loss in its operation.
CENTRAL FRACTIONS: OPEN WITH MARGIN
If prices are quoted at hundredths of cents How can you see a significant return on your investment when trading Forex? The answer is leverage. When you trade forex, you are effectively lending the first currency in the pair to buy or sell the second currency. With a market of $ 5 billion a day, liquidity is so deep that liquidity providers, large banks, basically allow you to trade with leverage. To operate with leverage, simply leave aside the margin required for your operation. If you are operating with 200: 1 leverage, for example, you can trade $ 2,000 in the market by retaining only $ 100 in the margin of your trading account. This gives you much more exposure while keeping your capital investment low. But leverage not only increases your earning potential. It can also increase your losses, which may exceed the deposited funds. When you are new to the forex market, you should always start trading with small leverage relationships, until you are comfortable in the market.