The foreign exchange market, or forex (FX) for short, is the largest financial market in the world and involves the buying and selling of currencies of world.
Without knowing forex, you have already probably participated in the foreign exchange market by ordering imported goods from many different countries.
More obviously, buying foreign currency when visited other countries.
Whether you’re new comers to forex trading or looking to build on your existing forex knowledge.
This post seeks to provide a solid foundation to the foreign exchange market.
The foreign exchange market works like most other markets like equities, futures market is subject to demand and supply.
For example, if there is a strong demand for the Euros from UK citizens holding Pound, they will exchange their pound into Euros.
The value of the Euros will rise while the value of the Pound will fall.
Keep in mind that this transaction only affects the EUR/GBP currency pair and will not for cause the EUR to appreciate against the Japanese Yen.
In reality, many factors that can move the FX market.
include big macro-economic events like the election of a new prime minister, or country specific factors such as the prevailing interest rate, GDP, unemployment, inflation and the debt to GDP ratio.
Many traders make use of an economic calendar to stay up to date with these and other important economic releases that can move the market.
WHAT IS FOREX TRADING AND HOW DOES IT WORK?
Many people surprise how to make money in forex trading.
Fortunately, the basics behind forex trading are quite straight forward.
If you think the value of a currency is going to go up (appreciate), you buy the currency.
This is known as going “long”.
If you feel the currency is going to go down (depreciate), you sell that currency.
This is known as going “short”.
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