Hello dear investors …. We will address together this article is a simple explanation and is dull Foreign currencies Trading. Of course it is possible to find such information in many other places on the Internet, but usually provide that information extremely dry.
For this, we will try to simplify the information in this article and for other articles on our site as much as possible, so you can find out more information about Forex Trading.
What is The Forex Market?
Forex Market is the place where to meet both banks, corporations, governments, investors and traders to exchange and currency speculation. Forex market also known as “the currency market” or “foreign exchange market” or “the foreign exchange market.” The forex market is the most liquid market in the world with an average daily trading volume to $ 3.98 trillion.
Forex market is open 24 hours a day, 5 days per week with more global trading centers in the world, which is located in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
It is noteworthy that there is no place or central market of the Forex market. But trading is from anywhere. This is in contrast to stock trading where there is a central market represented in the stock market.
A Historical Overview of The Forex Market
This part may be a bit boring for many investors, but it is important that you have some basic background knowledge of the history of the forex market so that you will know the reason for the existence of this market and how it came to us. The following is a short history of the Forex:
In 1876, the implementation of the so-called “gold exchange standard”. And requiring that all paper currency backed by gold is pure, and this idea was aimed at stabilizing the global currency by linking the price of gold. In theory it was a good idea, but in reality it has created patterns of boom and bust that led ultimately to the demise of the gold standard.
It has been dropped the gold standard throughout the world with the onset of World War II, where he did not have the major European countries have enough gold to support all major currencies. Although the gold standard regime fell at the end of the day, but the precious metal has not lost its place as the ultimate form of monetary value.
After that, the world has decided to apply fixed exchange rates, which resulted in the fact that the US dollar reserve currency core and it will be the only currency backed by gold, and this is what is known as the “Bretton Woods system.” In 1971, the United States announced that it would exchange gold in US dollars, and this was the end of the Bretton Woods system.
Thus, it has been broken Bretton Woods system, which eventually led to the universal acceptance of floating foreign exchange in 1976 prices, this is the current market generator of foreign exchange, but it has become electronically diffuse widely in the middle of 1990.
Now let’s move on to some of the topics most entertaining! ….
What is The Foreign Exchange “Forex” Trading?
Forex Trading is a speculation on the currency rate in another currency. For example, if you think that the euro will rise against the US dollar, you can then buy the currency pair the euro against the US dollar at a low price, in the hope of selling it at a higher price to make a profit. If you bought the euro against the US dollar, increased the value of the US dollar, you would have made a loss. Therefore, it is very important to be knowledgeable about the risks involved in foreign currency trading operation.
Why is the most popular Forex Market?
To become an investor in the field of forex trading, it provides you with the lifestyle of a very spectacular than any other profession in the world. It’s not easy to get there, but if you have enough determination and discipline it is certain that you will eventually, the following are the most important things you need to reach your goals in the forex market:
The ability – to accept the loss without any emotion.
Trust – to believe in yourself and your trading strategy, and that is liberated from fear.
Dedication – to become a better investor Forex.
Discipline – to comply with the emotional calm in a world full of constant seduction (the market).
Flexibility – to you trade Forex successfully to changing conditions.
Focus – to keep your own trading plan and not to move away from the track.
Logic – because you look at the market from the perspective of an objective and straightforward.
Regulation – on the formulation and promote positive habits of trading.
Patience – to wait for the top trading strategies according to your plan.
Realism – that does not covet the get rich quick and understand the reality of the market and trading.
Savvy – to take advantage of currency trading and be aware of what is happening at all times.
Restraint – not to over-trading and excessive use of leverage for your trading account.
Of The Trading in The Forex, and why?
Banks – the interbank market allows for both the majority of commercial trading transactions and trading large amounts of speculation every day. Some large banks are trading billions of dollars a day, and sometimes this is the trading on behalf of clients.
Companies – companies need to use the foreign exchange market to pay for goods and services from foreign countries, and also for the sale of goods and services in foreign countries. The corporate activity resulting from currency exchange in order to deal in other countries is an important part of the daily activity of the Forex market.
Governments / central banks – Central Bank plays in different countries play an important role in the foreign exchange markets. The central bank could cause an increase or decrease in the value of the currency, by trying to control money supply and inflation and interest rates. You can also use foreign exchange reserves to try to stabilize the market.
Hedge Funds – controlled by hedge fund speculation about exceeding billions of dollars of stock and that every day in the currency markets.
Individuals – if you travel to a country and you exchange your money for various currencies in the airport or the bank, so you have already participated in the foreign exchange market.
Investors – investment firms that manage large portfolios for their clients using the foreign exchange market to facilitate transactions in foreign securities.
Retail investors in The Forex – They represent the people on the next couple of trading in foreign currencies in the Forex market like you. The number of these investors is increasing day after day, especially with easy access to foreign exchange trading platforms and access them through the internet. These investors can access the market indirectly, either through intermediaries or brokers or through a bank.
The advantages of trading in the forex market:
* Forex market is the largest market in the world, beyond the daily trading volume of $ 3 trillion. This means high liquidity which makes it easy entry and exit to and from the market any time.
* Trading whenever you want: There is no date for the start of trading in the Forex market, you can get in and out of trading whenever you want during the period from Sunday 05:00 EDT to 16:00 EDT.
* Easy access: You can start your trading account by about $ 250, can also start trading on the same day directly through the execution of trading orders by clicking the mouse.
* Fewer currency pairs, allowing you to easily focus, instead of getting lost in an attempt to analyze thousands of stocks.
* Trading freedom from anywhere in the world, all you need is a computer connected to the Internet.
* Low commission and transaction costs than in the stock and commodities market.
* Market volatility allow investors to make a profit in any market conditions.
Finally, we must note that in spite of the diverse and multi-market pros, but there are many risks that come next profit potential. Because you may find that there are a lot of investors on the next trading believing that the forex market is not only its profits without regard to the risk side, which may cost the loss of money.