What is Forex?Forex trading, also known as forex, currency or currency trading, is a decentralized global market in which all world currencies trade. The forex market is the largest and most liquid market in the world with an average daily trading volume exceeding $ 5 trillion. All of the world's combined stock markets do not even come close to this. But what does this mean to you? Take a closer look at Forex trading, and you may find some interesting trading opportunities not available with other investments.
FOREX TRADE: IT'S ALL IN THE EXCHANGE
If you have ever traveled abroad, you have made a Forex transaction. Take a trip to France and you will convert your pounds into euros. When you do this, the forex exchange rate between the two currencies - based on supply and demand - determines how much euros you get for your pounds. And the exchange rate is constantly fluctuating.
What is Forex? What is Forex? 01: 54
One pound on Monday can bring you 1.19 euros. On Tuesday 1.20 euros. This tiny 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 this can do for a practical purpose, if, as in the example above, a simple exchange of one currency for another costs you more, depending on when you do it? These few kopecks add up quickly. In both cases, you, as a traveler or business owner, can keep your money until the forex course becomes more favorable.
FOREX OPPORTUNITIES: WHAT OPINION?
Just like stocks, you can trade currencies based on what you think about its value (or where it goes). But the big difference with forex is that you can trade up or down just as easily. If you think that the currency will grow in value, you can buy it. If you think it will decrease, you can sell it. With such a large market, finding a buyer when you sell and a seller when you buy is much easier than in other markets. You may have heard in the news that China devalues its currency in order to attract more foreign business to its country. If you think that this trend will continue, you can make a deal in the Forex market by selling Chinese currency for another currency, say, the US dollar. The more the Chinese currency depreciates against the US dollar, the higher your profit. If the Chinese currency rises in price when you have a sell position, your losses grow and you want to exit the trade.
Past performance: Past performance is not an indication of future results.
CREATING TRADE: HOW TO BUY AND SELL CURRENCY
You have an opinion. Now what? Open a free forex demo platform and exchange views.
What is Forex How to buy and sell currency
All forex transactions include two currencies, because you are betting on the value of one currency against another. Think of EUR / USD, the best-selling currency pair in the world. EUR, the first currency in the pair, is the base, and USD, the second, is the counter. When you see the price indicated on your platform, this price is equal to the value of one euro in US dollars. You always see two prices, because one is the purchase price and the other is the sale. The difference between the two is in distribution. When you click buy or sell, you buy or sell the first currency in a pair.
The basics of FOREX transactionsBased operations with forex 02: 03
Let's say you think that the euro will rise in value relative to the US dollar. Your pair is EUR / USD. Since the euro is in the first place, and you think that it will grow, you buy EUR / USD. If you think that the euro will fall in price against the US dollar, you are selling EUR / USD.
If the purchase price of EUR / USD is 0.70644 and the sale price is 0.70640, then the spread is 0.4 pips. If the transaction moves in your favor (or against you), then by covering the spread, you can make a profit (or loss) on your transaction.
PENNY FRACTIONS: TRADE ON MARGIN
If prices are in hundredths of a cent, how can you see any significant return on your investment when trading forex? The answer is leverage.
When you trade forex, you actually borrow the first currency in a pair to buy or sell a second currency. With a market of $ 5 trillion per day, liquidity is so great that liquidity providers — mostly large banks — allow you to trade with leverage. To trade with leverage, you simply set aside the necessary margin for your transaction size. For example, if you trade with a 200: 1 leverage, you can trade £ 2,000 in the market, leaving only 10 pounds on margin on your trading account. For a leverage of 50: 1, the same transaction size still requires a margin of around £ 40. This gives you a lot more options while