Forex, also known as currencies, FX or forex trading, is a decentralized global market of all currencies traded around the world. This market is the largest and most liquid in the world, with a daily volume of operations exceeding $5 trillion. The other stock markets in the world as a whole are not close to this. But what does that mean? Take a closer look at forex trading and you will find interesting trading opportunities which are not available in other investments.
FOREX TRANSACTION: EVERYTHING IS IN THE EXCHANGE RATE
If you’ve ever traveled abroad, you’ve made a forex transaction. Travel to France and convert your pounds to euros. When you do this, the exchange rate between the two currencies, based on supply and demand, determines how many euros you get for your pounds. And the exchange rate fluctuates continually.
One pound could give you 1.19 Euros on Monday. 1.20 Euros on Tuesday. This little change may not seem like a big deal. But think about it on a bigger scale. A large international company may have to pay foreign staff. Imagine what you could do to the bottom if, as in the previous example, you change one currency for another more depending on when you do it? These few cents quickly add up. In both cases, as a traveler or business owner, you may want to keep your money until the exchange rate is more favorable.
OPPORTUNITY IN FOREX: What is your opinion?
As on the stock market, you can change the currency based on what you think is worth. (or where he was headed). The big difference with the Forex is that you can trade with the same ease. If you think a coin will increase the value, you can buy it, if you think it will decrease the value you can sell it. With such a big market. You will find a buyer when you sell, and a seller when you buy, it is much easier than in other markets. You may hear from the news that China is devaluing its currency to attract more foreign companies to its country.
If you think the trend will continue, you could trade in a forex, selling the Chinese currency against another currency, for example the US dollar. The more the Chinese currency has been devalued against the dollar, the greater its benefits. If the Chinese currency increases in value while it has its open sales position, its losses will increase and it will want to exit the operation.