What is Forex
Many have heard about the possibilities of quite large earnings in Forex, but not everyone clearly understands what the market is and how exactly you can make money on it.
The concept of the FOREX market
Forex is an international global market. Currencies act as a commodity here. The very name FOReign EXchange in translation means "foreign exchange". It is quite acceptable to compare this market with an exchange office, where one monetary unit is bought (or sold) for another.
Forex provides an opportunity to gain profit from exchange rate differences. The rate is generally understood as a unit of one currency, expressed in units of another. If the demand for any of the currencies falls, it becomes cheaper. Therefore, another currency unit begins to be in excellent order, and its price increases. You can make money both on falling prices and on their growth.
Distinctive features of the Forex market
Forex prices formed through an agreement between bidders based on the supply and demand for a particular currency.
Such are the most important features of Forex:
Functionality. The original purpose of the creation - currency exchange. Market relations allow to carry it out at rates favourable for participants. Subsequently, traders began to use Forex for earning.
Lack of precise geographical reference to any local exchange platform. It allows anyone to carry out trading operations 24 hours a day from anywhere in the world with the Internet. Trading is performed with the help of a particular program installed on a computer or other personal devices.
Variety of market participants: majorities (central banks, large commercial and investment organizations), various trading firms, ordinary traders.
Forex exchange from a trader's position
The scheme of trading on the international currency market can be briefly described as follows. A trader, using a particular program (often the Metatrader platform), observes the charts of traded assets. After analyzing and making a decision to buy or sell, he submits a command to open a trading position. The team goes to the server of the broker, on whose website the trader is registered.
The broker, using information from liquidity providers, immediately gives the client the current result of this position on his trading terminal. Depending on the circumstances, a trade can be profitable or unprofitable. Subsequently, watching the price of an asset, a trader decides on the time of closing the transaction. It can be done either manually, or more conveniently - automatically by placing an order to limit profits and possible losses in advance.
Geography of the currency market
Unlike stock and commodity exchanges, Forex has no specific trading platform. Regional foreign exchange markets serve as working platforms for banking operations. The most important of them are the US, Asian and European markets. Interaction of platforms is carried out using the newest information technologies.
Trading is carried out via the Internet or by phone. And it can be done 24 hours a day.