You are knowledgeable until October 2023.
The constant development of business has given rise to various terminologies that most people do not understand very easily. One of these is
foreign exchange.
Forex trade as it is popularly known is the exchange of one currency for another with barter profits incurred by fluctuations in value. In other words, the foreign currency exchange market or trading in currencies for profit is one of the broadest and the most liquid markets existing and operated in the world.
Forex trading market is characterized by high liquidity and the fact that the market is open all day every day without resting for any holidays. Individuals, financial institutions, and huge corporations have found this form of trade very enticing mostly due to these two reasons.
Scenarios foreseen in the Foreign Exchange
Forex trading market is characterized by high liquidity and the fact that the market is open all day every day without resting for any holidays. Individuals, financial institutions, and huge corporations have found this form of trade very enticing mostly due to these two reasons.
Scenarios foreseen in the Foreign Exchange
Markets
The forex market is mostly an inter-bank market, that is, exchanges happen between banks through their dealing rooms and not through a centralized exchange. Most trades consist of a currency pair where one currency is traded for another. For instance, the Euro and US Dollar currency pair symbolised as EUR/USD is the most common pair traded in foreign exchange market. Whenever currency players purchase any currency pair they are said to buy the base currency and at the same time sell the quoted currency. In the case of EUR/USD which speaks buying the euro relative to the us dollars the quote and selling back the us dollar for euros, to sell the pair will mean to sell euros and buy the dollars.
Geographical Factors: As in the case with a turbulent or stable geography, rapid upheaval or some other political event can also bring volatility into the processes of currency exchange.
Psychological Factors: The way in which market participants digest a piece of news or a market situation and respond to it can either increase a currency’s demand and price, or vice versa.
Forex prices are determined by multiple factors, for instance:
Economic Factors: Impacting currency values, are varying statistics such as interest rates, inflation rates, GDP values, or employment rates.Geographical Factors: As in the case with a turbulent or stable geography, rapid upheaval or some other political event can also bring volatility into the processes of currency exchange.
Psychological Factors: The way in which market participants digest a piece of news or a market situation and respond to it can either increase a currency’s demand and price, or vice versa.
Major Institutions within Forex
However, in over the counter or forex trading, banks and other financial corporations around the globe, cross business firms, hedge funds and individual retail traders form the main participants in the trade. Central banks are more active than any other institution since they maintain strategic reserves and implement policies aimed at controlling the currency. This, therefore, implies that a country once her federal bank such as the U.S. Federal Reserve Bank or European Central Bank can buy or sell currencies in the foreign exchange market in a bid to either lower or raise their exchange rates as part of a higher economic strategy.
Forex trade has a great strategy. This means that every forex trader adopts a different way of selling and buying currencies considering the fact that every trader has different objectives and risk appetites. Among the techniques commonly adopted are:
Forex trade has a great strategy. This means that every forex trader adopts a different way of selling and buying currencies considering the fact that every trader has different objectives and risk appetites. Among the techniques commonly adopted are:
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