Learn About Forex Trading

Learn About Forex Trading

The currency market is the “place” where the currency is traded. The currency is important for most people around the world, whether they realize it or not, because currencies must be exchanged for doing business and foreign trade. If you live in the United States Act And you want to buy cheese from France, you or the company where you buy cheese have to pay French cheese in euros (EUR). This means EE importer. Your law should change the equivalent of the US dollar (USD) to euro. The same goes for traveling. French tourists in Egypt can not pay the euro to see the pyramid because it is not the local currency received. Thus, tourists should exchange the euro for local currency, in this case the Egyptian pound, at the current rate.

The need to change currency is the main reason why the forex market is the largest and most liquid financial market in the world. It fights other markets in size, even on the stock market, with an average commercial value of about 2 billion US dollars per day. (Total volume changes over time, but as of August 2012, the Bank for International Settlements (BIS) reports that foreign exchange markets are trading more than US $ 4.9 trillion per day).

The unique aspect of this international market is that there is no major currency market. Actually forex trading is done electronically without a prescription (OTC), which means that all transactions take place through computer networks among merchants around the world, rather than in one centralized exchange. The market is open 24 hours a day, five and a half days a week, and coins are traded worldwide in major financial centers in London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris. and Sydney, through almost every time zone.This means that when the trading day in the US expires. Act., The currency market is starting again in Tokyo and Hong Kong. Thus, the forex market can be very active at any time of the day, with offer prices constantly changing.

Spot Market and futures and futures markets

Actually, there are three ways in which institutions, companies and people exchange currencies: spot markets, futures markets and futures markets. Currency trading in the spot market has always been the biggest market because it is a true “underlying” asset in which futures and futures markets are based. In the past, futures markets were the most popular place for traders as they were available to individual investors for longer periods of time. However, with the advent of electronic commerce, the spot market has witnessed a massive increase in activity and now outperform futures markets as a preferred trading market for individual investors and speculators. When people refer to the currency market, they usually refer to the spot market. Futures and futures markets tend to be more popular among firms that need to hedge against exchange risks up to a certain date in the future.

What is a spot market?

More specifically, the spot market is where coins are bought and sold at current prices. This price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards the current political situation (both local and international), as well as perceptions of future performance of one coin in front of another . When the deal is completed, this is known as a “spot deal”. This is a bilateral transaction in which one party provides the agreed amount of money to the counterparty and receives a number of other currencies at an agreed exchange rate. After closing a position, the deal is made in cash. Although the spot market is known as a transaction that deals with current transactions (not in the future), this operation actually takes two days to complete.

Related Post