What is Foreign Exchange (FOREX)?
Forex or Foreign exchange is the world’s biggest financial market. On any given day, over $1.5 trillion are traded here. This market provides income to large banks and traders all around the world. What sets Forex apart from the other markets is that it is not affiliated with any stock exchange. It is basically an off-exchange or over-the-counter market.
What is the purpose of Forex?
Forex is the mechanism by which these two currencies are priced or valued relative to each other. In short, it is crucial for determining the exchange rate. Whenever an institution or an individual purchases one currency, it sells another currency in return. Currency trading always occurs in this form of simultaneous transaction. Traders involved in Foreign Exchange make or lose profit by predicting, or “speculating,” on whether the value of a certain currency will rise, or fall, in comparison to the value of another currency. The trader will buy and sell the currencies that he owns based on this prediction.
The benefit of operating in this market is that Forex is not dependent on the economy of a particular country. The trader will still make money as long as he buys and sells the right currency.
What are the key currencies in Forex?
Despite having hundreds of different currencies around the world, only a few are considered as the major players in Forex. These are:
Operation hours of the Forex market
Unlike the stock market, there is no official time for the opening or closing of the foreign exchange market. In short, it is always operational. It moves according to press releases of central banks, economy reports from various governments, geopolitical events and other factors. And whenever traders from one country call it a day, traders from other countries are just getting ready to begin their work. It is a market that never sleeps. The market, however, closes for the weekend. It closes at 4PM EST every Friday and opens at 5 PM EST every Sunday. Trading starts in Australia and moves to the succeeding financial centers based on the business hours in that particular city. The trading volume is at its highest at 3 AM EST and 8-11 AM EST when the London and New York markets opens respectively.
How does trading work?
Trading in the foreign exchange is normally done through a market maker or broker. You need to speculate and select a currency pair that you think will shift in value and ask your trader to move accordingly. For example, you buy 1,000 Euros worth for $1,300 USD, if at the end of the year, 1,000 Euros increased its value and is now worth $1,400, you have made a profit of $100.
For extra guidance above article be sure to pay a visit to foreign website now!
Forex or Foreign exchange is the world’s biggest financial market. On any given day, over $1.5 trillion are traded here. This market provides income to large banks and traders all around the world. What sets Forex apart from the other markets is that it is not affiliated with any stock exchange. It is basically an off-exchange or over-the-counter market.
What is the purpose of Forex?
Forex is the mechanism by which these two currencies are priced or valued relative to each other. In short, it is crucial for determining the exchange rate. Whenever an institution or an individual purchases one currency, it sells another currency in return. Currency trading always occurs in this form of simultaneous transaction. Traders involved in Foreign Exchange make or lose profit by predicting, or “speculating,” on whether the value of a certain currency will rise, or fall, in comparison to the value of another currency. The trader will buy and sell the currencies that he owns based on this prediction.
The benefit of operating in this market is that Forex is not dependent on the economy of a particular country. The trader will still make money as long as he buys and sells the right currency.
What are the key currencies in Forex?
Despite having hundreds of different currencies around the world, only a few are considered as the major players in Forex. These are:
- $ or the U.S. Dollar
- € European currency
- Can$ Canadian Dollar
- Sf Swiss Francs
- ¥ Japanese Yen
- £ British Pound Sterling
- New Zealand and Australian Dollars
Operation hours of the Forex market
Unlike the stock market, there is no official time for the opening or closing of the foreign exchange market. In short, it is always operational. It moves according to press releases of central banks, economy reports from various governments, geopolitical events and other factors. And whenever traders from one country call it a day, traders from other countries are just getting ready to begin their work. It is a market that never sleeps. The market, however, closes for the weekend. It closes at 4PM EST every Friday and opens at 5 PM EST every Sunday. Trading starts in Australia and moves to the succeeding financial centers based on the business hours in that particular city. The trading volume is at its highest at 3 AM EST and 8-11 AM EST when the London and New York markets opens respectively.
How does trading work?
Trading in the foreign exchange is normally done through a market maker or broker. You need to speculate and select a currency pair that you think will shift in value and ask your trader to move accordingly. For example, you buy 1,000 Euros worth for $1,300 USD, if at the end of the year, 1,000 Euros increased its value and is now worth $1,400, you have made a profit of $100.
For extra guidance above article be sure to pay a visit to foreign website now!
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