What is forex trading?
Forex trading is the trading of currencies from different countries to each other. Forex is short for Foreign Exchange. For example, currency in circulation in Europe called Euro (EUR) and in the United States, the currency in circulation is called the U.S. Dollar (USD). An example of forex trading is to buy the Euro while simultaneously selling U.S. Dollar. This is called will be abbreviated as EUR / USD.
Meanwhile, the Forex market is called a non-stop where there are countries currencies are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold in local and global markets and the emergence of 'an increase or decrease in value based upon currency movements. Market conditions can change at any time in response to events both economic events, politics, war, disaster, which occurred especially in countries with advanced economies and the kua.
Forex market is often referred to as the foreign exchange market, this represents a market of trade the most money. Very large so it is very liquid (it can sell and buy at the market rate as at any number)
Unlike traditional market, most trading is done through electronic trading networks. There is no central trading location which specially. The foreign exchange market allows companies, banks and other financial institutions to buy and sell foreign currency in large amounts.
The main market players markets are "inter bank" in which banks, large corporations and large financial institutions manage the risks associated with fluctuations in currency exchange rates.
In general, forex market participants came from various groups including:
Customers, such as multinational corporations, to participate in the forex market because they need foreign currency to their trades in other countries. As such, a certain company based in the UK need to use the foreign exchange market to buy the currency they need to pay for their partner companies in other countries that sell heavy equipment.
Banks and financial institutions, is the most active participants in the forex market. They deal with other financial institutions to ask their foreign exchange and currency they can buy what they need in the forex market. In addition to central banks and governments, one of the greatest actors in the forex transactions are banks. Interbank market is a market where big bank2 transact among themselves and determine the price of the currency to be seen by traders as individual as we are on the computer screen.
Banks, in general, acting as a dealer who buy / sell currency at the bid / ask her. One way these banks get money is to sell the currency at a higher price than he bought to its customers. Because the forex market is not centralized alias decentralized, then the natural thing to see one bank to another bank had little difference in the exchange rate
Broker is a company with links computer software or phone lines to banks around the world. It is the job of forex broker to find out what bank has the highest level to buy the currency and what the bank had the lowest rate to sell the currency.
Using a broker allows the bank to find the best deal available in the world. Forex brokerage firms, but is not related to money itself, but only charge a commission for their services.
Government, forex is the most influential actors, the central bank. In many countries, the central bank is an arm of the government and its policies run jointly with the government. However, some governments feel more independent. A central bank more effective in carrying out their duties to boost the economy. Regardless of how indipendennya a central bank, government representatives are regularly consulted with representatives of central banks to discuss monetary policy. Thus, governments and central banks usually have a package in terms of monetary policy. Central banks often intervene in the market for the purposes of a particular country's economy.
Business actors, is one of the biggest clients of these banks, those involved in international transactions. Both businesses are selling goods to international clients or to buy goods from international suppliers, they have to deal with the volatility of currency fluctuations. Uncertainty becomes hated by management and business owners. Dealing with foreign exchange risk is a major problem for multinational companies. For example: a firm in Germany ordered the equipment from the factory in Japan to be paid in yen a year from now. Because exchange rates can fluctuate wildly dg throughout the year, the German company will not know whether the Euro will be spend more or not at the time of shipment later. One way for businesses to reduce the uncertainty due to foreign exchange risk is to go to the spot market and transact directly to the foreign currency they need. But, unfortunately, a businessman may not have enough money on hand to make a spot or do not want to hold the amount of foreign currency which is very much for a long time. Hence business people often apply the hedging strategy to lock a specific currency at a certain price for a position in the future.
Speculators, they are not to hedging so not subject to price movements for reasons of international transactions, speculators are trying to earn money by taking advantage of price fluctuations. One of the most famous speculator George Soros possible. Billionaire who is known to decrease speculation in British Pound generating 1.2 billion dollars less than a month! Some critics say that such people are responsible for the Asian financial crisis of the late 90's.
Forex Trading Objectives
In simple and basically, our goal is to achieve a profit trading or profits. So this is what will be one of the main and final goal in our learning process. You can achieve a profit in which infinitely fast in forex trading, but this is like a double-edged sword, you can also go broke suddenly, so wise and careful
On the way to be successful traders usually without realizing it and you will get turned into a figure who is more desiplin, patient, calculating, and can control themselves well. Because you are not likely to profit which is stable without it.
Read the articles supplementary to sub this:
- Obtain money from forex gains and
- Advantages of trading forex
When you can trade forex?
Trading can be done 24 hours a day, 5 days a week Monday s / d friday
- Beginning of new zealand & australia market hours 5:00 to 14:00 pm,
- Then to the asia markets, namely Japan, Hong Kong & Singapore at 7:00 a.m. to 16:00 pm,
- Then the European markets of Germany and England at 13:00 to 22:00 pm
- Up to the American market hours 20:00 to 5:00 (next day).
With one long interval of time, you can adjust when trading with your spare time. Be it morning, noon, or night. Maybe this time you place it was late and people were already asleep for the rest. But elsewhere in the world Is not currently being during the day, where people are actively doing business. Practical FX trading then lasts for 24 non stop. Beginning early Monday when parts of the time in NZ / AU until the early hours of Saturday in parts of the U.S. (new york).
Forex Risk
Forex like a double-edged sword. With forex you can make a quick get rich, but the reverse can also instantaneously mengikikis depleted our capital. So forex risk factors eminence. So understand the true risks in forex and do not get the wrong foot.
Conclusion
Special trade Forex currency of the country.
forex markets are the largest and most liquid currencies in the world.
Forex can be done anytime.
With the recent developments (the Internet) then the forex trading can be done online (anywhere).
Forex can quickly make you rich or poor.
Because of this a big risk, you should be wise and fully understood before you decide forex plunge in it.
