At the latest when you are traveling abroad and could not pay with euros, youinevitably came with Forex or currencies in contact. Because even the change ofsome euro notes into another currency belongs to the large network of foreign exchange markets. However, all this “physical” currency exchange maketogether only a fraction of the actual foreign exchange market.
Because the Forex market is the largest and most liquid market in the world.And the majority of runs electronically. Here, every day up to 4 trillion US dollarsare implemented. But how does the Forex market and how can you generateprofits as investors there. In the following overview, we want to give you a briefinsight into the foreign exchange market.
(1) what is Forex?
The term Forex comes from the banking system. Forex foreign means ofpayment are also foreign currencies. They are also known as “Grades”. Especially in Forex trading by banks, the term refers to bank deposits, or capital in foreignbanks. Forex are electronically to an account for example in the form of foreign currency, or can be transferred via check.
Short and concise: Keep currencies the dollar bill in the hands, in foreign currency, the currency transfer takes place electronically, as also in the globalforeign exchange market.
(2) what do the currency exchange rates?
The label for the courses, two terms are common: the exchange rate and theexchange rate. Both express the value of one currency to another currency.
A currency’s exchange rate is the price in foreign currency for a unit of domesticcurrency. The exchange rate is interesting for you, so if you travel abroad.
For example, You travel in the United States and need to exchange money. Thenyou get paid for 1 euro, which you put on the bank counter 1.30 US dollars.
The exchange rate is the price in tolars for one unit of foreign currency. Example:If you want to have $ 1 on the foreign exchange market, you must provide 0.77euros for it.
They differ only in the way. Simplified you speak of exchange rates, and foreign exchange rates if you replace “physical” bank notes, if you participate in theelectronic foreign exchange trading.
(3) a person who provides the exchange rates?
Exchange rates are provided within the framework of the inter bank market. Therespective counterparty of each Forex trading business are crucial for theexchange rate for a currency pair. Through the ongoing trade on the futures exchanges, the respective currency pairs are subject to continual rate changes.The courses are therefore each constantly provided by counterparties of allthese transactions and subject to the second change.
(4) how can private investors Trade Forex?
Private investors can trade foreign exchange varied. Investors can be on theforeign exchange market through the use of derivatives such as currency or basket certificates the different currency pairs or even entire currency baskets. As this but there are additional costs is the direct trading on the foreign exchange market via Forex the more interesting alternative.
To act directly on the Forex, you need a custody account at a specialized broker(Forex broker). In our section, Forex brokers have the ability to compare theperformance of many Forex brokers.
(5) how does Forex trading work?
In the global foreign exchange market – foreign exchange, Forex opinie or FX alsocalled – all market participants act (like for example plus500) together or with each other. Like a hugeneural network, all market participants are electronically linked and tradecurrencies directly or indirectly through financial instruments such as options orswaps.
The most liquid market in the world with some 3 to 4 trillion US dollars dailyturnover is influenced most by the direct trade with the major currency pairs,such as EUR/USD, USD/JPY, GBP/USD and USD/CHF. These currency pairs arecalled also majors. The currency of market participants rely on one currencyagainst the other currency is sold or purchased.
When your buying and selling interests there are the most varied reasons. Thereare after all not just speculators who rely on the rise or fall of a base value, butalso companies that track transfers from one to the other currency in large sums of money.
Institutional market participants, such as banks, hedge funds or investment funds track getting big gains. To do this you use interest rate differencesbetween two currency zones or the economic recovery in a currency area. So isused on falling and rising currencies to reap billions in profits.
On top of that the central banks of the respective currency areas through thestructure of interest rates or intervention in the foreign exchange market controlthe partly considerably