VIDEO
The forex market is the foreign exchange market. Forex is short for Foreign Exchange market. It is the world’s largest, with a volume of over 4 trillion dollars daily business financial market. To understand what this means turnover, it is what can move the NYSE (the largest in the world) throughout a trading month.
HOW trading at FOREX?
With money. What? Yes, Forex trading involves buying and selling currencies, coins, ie money. Currencies are traded through a broker or dealer and are traded in pairs, for example Euro and US dollar (EUR / USD).
I really do not buy or sell anything physically so you can confuse a little. Think about buying currency as buying a share in the economy of a country, as the price of its currency is a direct reflection of what the market thinks about the present and future state of the economy. Forex, as mentioned, is traded in currency pairs, as stated in this paragraph the quoted price of a given currency pair reflects the economic conditions of a country before the country of the other currency that makes up the pair .
Unlike other financial markets, the Forex market is decentralized and does not have a physical location. The Forex market is considered an interbank market or OTC (over-the-counter, over the counter), due to the fact that this market operates electronically in a network between banks 24 hours a day.
In the late 90s of the twentieth century, only investors with high financial power had access to trade in Forex, with an initial capital of 10 million. Forex was originally intended to be used by banks and large institutions. However, due to the expansion of the Internet, today there are companies that offer online Forex trading Forex “retail” for retail investors.
WHAT IS FOREX MARKET EXCHANGE?
The foreign exchange market or also known as foreign exchange or forex market is one in which the foreign exchange is given. It is considered the largest financial market in the world. The exchange rate represents a key macroeconomic variable for any economy, so it is also the currency market.
Quotes are given by the exchange rates of the currencies in question, report on the price at which you should buy or sell a currency, the behavior of the exchange market and the position you want to be the operator of the table changes. The prices are fixed, in general terms, by the ratio of supply and demand. The exchange rate of one currency in terms of another permit facilitating trade.
Usually, central banks play a key role in the exchange market, and that monitor and regulate in order to prevent it from affecting the economy as a whole. Much of what happens in the currency market reflects the central bank intervention and the modalities of exchange to be established.
In cases in which much freedom in foreign exchange markets are restricted, usually arise markets (exchange) parallel seeking to meet the needs of operators who are dissatisfied with the restrictions on currency trading.
OPERATION OF EXCHANGE MARKET
The foreign exchange market allows buying or selling currencies. His modus operandi differs from other financial markets such as the stock market or the bond market, as it requires an established place to operate, it can be carried out in different facilities such as bank counters, exchange or through one computers or phones.
The price at which the currency is acquired is known as the exchange rate, which is determined by supply and demand of currencies. The foreign exchange market is available virtually 24 hours a day because there will always be someone somewhere in the world that has the need to change its currency for another.
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Coins or currency are recent commodities on the market. Every time a company or government buy or sell products and services in a foreign country, are subject to a currency trade that implies a change of one currency for another. The size of the currency market is much larger than all the US stock markets combined with a volume larger than all world markets as a whole daily exchange. The business of foreign currency trading is the core of the main financial centers around the world including New York, London and Tokyo, creating a single international market and immense amounts of transactions that total over 2.5 trillion dollars a day (U $ 2,500,000 million).
Each day begins with the dawn of individual investors trading one Australian continent in the city of Sydney, currency for another. and they are slowly incorporated throughout the day, the other financial business centers such as Tokyo, London and finally New York.
He is the fastest, most fluid and fastest growing in the modern financial world market. It is a vibrant and exciting market that brings together the most diverse group of investors from the most remote corners of the planet. Unlike other financial markets, the Forex market has no physical location or central exchange operations. Therefore it is considered a “ov er -the-counter-mark et” where buyers and sellers including banks, corporations and investors are to make their transactions. This market operates by phone, online or through an electronic network of banks, intercommunicating corporations, companies and individual investors trading one currency for another.
The absence of a place of physical exchange enables the Forex currency market operate 24 hours a day, covering different time through the major financial centers areas. The diversity of communication channels and the sheer volume of participants in this market make it impossible to control the direction of these markets, especially from the governments of the countries. Only 5% of the volume is traded by companies and governments that buy or sell products and services to other countries, or need to convert their business profits made abroad in local currency. The other 95% of the traded volume is traded for in individual versionistas and organizations also trade currencies for speculative purposes. The unparalleled liquidity and activity tirelessly 24 hours a day 7 days a week make this market an ideal haven for professional traders.
Who participates in the Forex market?
CENTRAL BANKS
The Central Bank is the monetary authority of the country they represent. Among its main responsibilities include the issuance of currency and monetary policy.
They are usually public entities. However US this organization is private (EDF or Federal Reserve). This is because an independent central bank encourages inflation in check as demonstrated empirically. Therefore whether other public entities is normal that are independent state agencies.
The main objective of central banks is to maintain stable conditions of its currency, that is, maintain the value of the currency and keep prices stable. To do the central banks participating in the foreign exchange market and intervene in interest rates. Therefore we can say that they have great influence on the evolution of the economic policy of each country.
COMMERCIAL BANKS AND INVESTMENT
Commercial banks are those that deal with the general public. The benefit of these banks is the result of the sale of financial products (such as pension plans, investment funds …) for the collection of fees or by the spread between the interest charged on loans and paid on deposits.
Investment banks are engaged in trade in the financial markets, take companies public, treat mergers and acquisitions between companies and private companies issue bonds, among other functions.
Both types of banks are the main participants in the Forex market as well as operating on behalf of its customers can do on their own. Therefore receive privileged to know, at all times, the positions of its customers information. Forex trading by banks are very profitable and therefore have a strong presence in Forex.
INTERMEDIRIOS FINANCIAL COMPANIES.
Financial intermediaries are financial institutions. Among its features are sending the savings to companies that need funds, thus facilitating the flow of money into the economy. The institutions involved in the forex market to invest the savings of their customers in business in other countries where other currency is traded. Brokers and financial intermediaries are also channeling all operations of traders and individual investors.
Companies and corporations are often involved in foreign exchange for the sale of goods through financial intermediaries market. In addition, participating in the forex market provides them the opportunity to cover a possible risk in the exchange rate.
Hedge funds or hedge funds
Hedge funds are called in various ways such as hedge fund, fund high-risk hedge fund or Hedge-Fund.
Hedge funds are private investment partnerships. Your business is derived from trading in financial markets, both long and short positions as using financial derivatives. Also they use a high degree of leverage.
Hedge funds are corporations in which the partners are referred to partner with investors and greater participation is the fund manager. To join these funds a large amount of capital is needed. So hedge funds to take large amount of capital to invest are very strong when operating in forex
INDIVIDUAL INVESTORS
Individual investors have emerged with the help of internet, the Forex market became an alternative to investing in stocks. Before the minimum capital to operate in forex was one million dollars greatly limiting individual investors But with the development of Internet banking and the business that it represents for the brokers have allowed anyone to trade forex with Low capital.