The Understanding Forex

The Understanding Forex : Previously we would explain about the learning Forex Trading is now getting crowded in play by the investor and the beginner to the society which is increasingly crowded to play in Forex.

Forex Trading is trading currencies from different countries with each other. Forex is acronym of Foreign Exchange. For example, in Europe the currency in circulation is called the Euro (EUR) and in the United States, the currency in circulation is called the U.S. Dollar (USD). An example of a forex trade is to buy the Euro while simultaneously selling U.S. Dollar. It is called will be abbreviated EUR / USD. While, whose name Forex market is a non-stop cash market where currencies are traded states that, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold in the local and global market then experienced "an increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

Forex market is often referred to as the foreign exchange market, this is a large market with growing and liquid financial (deposit and can be withdrawn at any time) that operates 24 hours a day. This is not a market in the traditional sense because there is no central trading location. Most of the trading is done through a network via electronic trading. The foreign exchange market enables companies, banks and other financial institutions to buy and sell foreign currency, a large amount.

The main market is the currency market for "inter-bank" where banks, large corporations and large financial institutions to manage the risks associated with fluctuations in currency exchange rates.
Main Currencies are traded in the market:

    U.S. Dollar (USD)
    Jeopang Yen (JPY)
    Euro (EUR)
    Canadian Dollar (CAD)
    Australian Dollar (AUD)
    Swiss Franc (CHF)
    British Pound (GBP)

Market Participants in the Forex Transactions:

Customers
: such as multinational corporations, participate in the forex market because they require foreign currency for their trade in other countries. Like for example, a particular company based in the UK need to use the foreign exchange market to buy the currency they need to pay 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 rates, and they can buy the currency they need in the forex market. In addition to the central bank and the government, one of the biggest players in the forex transaction is the bank. Interbank market is a market where large bank2 transactions between them and determine the price of a currency as that seen by individual traders as we are on a computer screen.

Banks : in general, act as dealers buy / sell currencies at the bid / ask her. One way the banks make 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 a reasonable view of the bank with other banks had little difference in the exchange rate

Broker is a company with links computer software or phone lines to banks worldwide. It is the job of a forex broker to know what banks have the highest level to buy the currency and what banks have the lowest levels to sell the currency.

By using a broker allows for banks to find the best deal available in the world. Forex brokerage firms, but this is not related to money itself but only charge a commission for their services.

Government
: forex is the most influential actors, in addition to the central bank. In many countries, the central bank is an arm of the government and carry out its policies together with the government. However, some governments feel more independent. A central bank more effective in carrying out its duties to boost the economy. Regardless of how indipendennya a central bank, government representatives usually regularly consult with representatives of the central bank to discuss monetary policy. So, governments and central banks usually have a package in terms of monetary policy. The central banks often intervene in the market economy for the purposes of a particular country.

Business Actors
: is one of the biggest clients of these banks, those involved in international transactions. Both these businesses sell goods to an international client or buying goods from international suppliers, they have to deal with the volatility of currency fluctuations. Uncertainty into management thing and hated by the business owner. Dealing with the foreign exchange risk is a big issue for multinational companies. For example: a company in Germany ordered the equipment from the factory in Japan to be paid in Yen 1 year from now. Because of the exchange rate can fluctuate wildly throughout the year, the German company will not know whether to issue a euro more or not at the time of delivery 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 businesses may not have enough cash on hand to make spot transactions or do not want to hold the amount of foreign currency which is very much for a long time. Hence businesses often implement hedging strategy to lock specific currency at a certain price for positioning purposes in the future.

Speculators : they instead download that are not subject to hedge price movements for reasons of international transactions, speculators trying to earn money by taking advantage of price fluctuations. One of the most famous speculator George Soros. Millionaire who is known for speculation on the British pound decreased 1.2 billion dollars to make money less than a month! Some critics say that such people are responsible for the Asian financial crisis of the late 90's.

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