About Forex | What Is Forex Trading | Digital Currency Online
About Forex | What Is Forex TradingWhat About Forex? The modern Foreign Exchange Market, or Forex as it is more commonly known, evolved in 1970 when the world economies moved away from fixed currency rates to floating currency rates. This new method of foreign exchange now determines the relative value of each country’s currency. В We are going to look into more information about Forex. The Forex Market is a global decentralized market where governments and financial institutions freely trade currencies. The Forex market operates twenty-four hours a day, however it is closed on the weekends. It is the most liquid financial market in the world. Because of the difficulties over sovereignty when involving the currency of two different countries, the Forex market operates with very little regulation. Large financial institutions and governments were the initial traders involved in the Forex market, using it largely to support their own country’s currency. The Forex market also assists in foreign trade by allowing currency conversion. Through the Forex market, a company in the United States can buy goods from a member of the European Union and use Euros to pay for these goods, even though the company does business in the United States. Recently however the Forex market has been used for direct speculation on the value of currencies, as well as the speculation on the interest rate differential between the two currencies. The very basics about Forex of a speculative Forex trade would have the currency of one country being used to buy the currency of another country. When one country’s currency is valued lower than another, the currency will often be bought with a currency of a higher value. Currency transactions are always done in pairs – one currency used to buy another. This transaction is done through a smaller financial firm, known as a ‘dealer’. The newly purchased currency will then be held on to by the buyer until it increases in value, at which time it will then be sold again, ideally for a profit. The profit is represented by the difference between what it was bought for and what it is now being sold at. Often the Forex transaction will be as large as hundreds of millions of dollars, with relatively small profit margins. Whereas initially it was only large financial institutions and governments who would transact in this world market, the Forex market has now been made easily accessible by the several smaller financial firms, or ‘dealers’, to anyone who has the resources and determination to play on a global scale. However be forewarned, Forex trading is not for the feint of heart, as it is highly volatile. While fortunes can be made in a day, so they can also be lost.
