For the reader refers to as Forex (currency), an international exchange market where currencies are bought and sold. The Foreign Exchange Market that we see today began in 1970, when free exchange rates and floating currencies were introduced. In this context, the participants in the market determine the price of one currency against another, depending on demand and supply of money.
The Forex market is quite unique for a number of reasons. First, it is one of the few markets in which we can say with a few qualifications that is free of external controls and can not be manipulated. It 'also the largest liquid financial markets to do with trade between the U.S. $ 1 and $ 1.5 billion a day. With so much money moving this fast, it is clear why a single investor would find it almost impossible to significantly affect the price of a major currency areas. In addition, the liquidity of the market means that unlike some rarely in stock exchange, traders can open and close positions in a few seconds, they are, there are always buyers and sellers.
A feature quite unique in the Forex money market is the variance of the participants. Investors find a number of reasons for entering the market, some investors to cover the longer term, while others use credit lines to seek large mass of short-term gains. Interestingly, unlike blue-chip companies that provide generally good for the long-term investor, the combination of relatively constant daily fluctuations, but small in exchange rates, creating an environment which attracts investors with a wide range of strategies.
How does Forex
Transactions in foreign currencies are not centralized on an exchange, rather than saying that the NYSE and then conquer the world through telecommunications. Trade is open 24 hours a day from Sunday afternoon to Friday afternoon (00:00 GMT and 10:00 GMT clock Monday to Friday). In almost all time zones around the world there are dealers who quote all major currencies. After deciding what currency the investor wants to buy, he or she so one of these dealers (some of which can be found online). And 'quite common for investors to currency prices, offering a line of credit (available with a capital of only $ 500) to speculate the increase, and large gains or potential losses. This is called marginal trading.
Marginal commercial
Marginal trading is simply the term used for trading with borrowed capital. E 'due to the fact that in Forex investments can be made without a real money supply attractive. This allows investors to invest much more money with fewer money transfer costs, and open large positions with a much smaller amount of real capital. So we can make relatively large transactions, very quickly and inexpensively, with a small amount of seed capital. Marginal trading in an exchange market is quantified in many. The term "lot" refers to approximately $ 100,000, an amount that can be achieved through the establishment of just 0.5% or $ 500.
Example: You believe that signals the market has shown that the pound will strengthen against the dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait to get on the exchange rate. In the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $ 405. Thus, an initial investment of $ 1,000, have reached over 40% of the profits. (Just as an example of how exchange rates change in a day, a change in average daily euro (dollar) is 70-100 pips).
If you decide to close a position, the amount of deposit that was originally done to you and to calculate the gain or loss. The gain or loss is then credited to your account.
Investment Strategies: Technical analysis and fundamental analysis
The two basic strategies for investing in Forex technical analysis or fundamental analysis. Most investors in small and medium-sized enterprises in the financial markets using technical analysis. This technique stems from the assumption that all the information available on the market and a certain future price fluctuations in the chain of money. This means that all the factors that affect the price already takes into account the market and are therefore reflected in the price. In essence, then, what this type of investors, is the starting point for his / her investments on three assumptions.
They are: the movement of the market considers all factors that the movement of prices is an appropriate and directly related to these events and that history repeats itself. Someone using technical analysis looks at the higher prices and a currency, the opening price and closing, and the volume of transactions. The investor does not try to outsmart the market or even predict major long term trends, but just look what happened to that money in the recent past, and predicted that small fluctuations usually just go on as before were.
Fundamental analysis is that the current situation in the country of the currency, including such things as its economy, political situation, analysis and other related items. In figures, the economy of a country depends on a series of quantifiable measures such as the interest rate the central bank, the national unemployment, fiscal policy and rate of inflation. An investor can also expect less quantifiable events, such as political unrest or transition will also have an impact on the market. Against all predictions on the basis of only the elements, but it is important to remember that investors must also keep the expectations and the expectations of market participants. Because, as in every exchange, the value of a currency is to a large extent on the perception and expectations about the money, not only on its reality.
Earning money on the Forex currency trading
Forex investing is one of the most potentially rewarding types of investments. Of course the risk is high, it means the ability to conduct operations on Forex marginal, the potential benefits are huge compared to the initial investment. Another advantage of forex is that its size prevents almost all attempts by others to influence the market to their advantage. While the time to invest in foreign exchange markets, you may feel pretty sure that the investment he or she has the same chance to make a profit as other investors throughout the world.
While short-term investments in the Forex requires some degree of attention, investors may feel to use technical analysis are relatively confident that their ability to read the daily fluctuations in foreign markets should be to give them the skills necessary to informed investment are active.
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