Forex trading is the trading of currencies from different countries with each other. Forex is an abbreviation of Foreign Exchange. For example, currency in circulation in Europe called Euro (EUR) and in the United States, the currency in circulation is called the U.S. Dollar (USD). An example of forex trading is to buy euros, while simultaneously selling the U.S. Dollar. This is called will be abbreviated as EUR / USD.
Meanwhile, the name The Forex market is non-stop cash market where currencies are traded states, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold in local and global markets 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 event.
Forex market is often also called the foreign exchange market, this is a huge market with growing financial and liquid (can deposit and liquidated 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 trading is done through electronic trading networks. Foreign exchange market allows companies, banks and other financial institutions to buy and sell foreign currency, in large quantities.
The main market for the currency markets are "inter bank" where banks, large corporations and large financial institutions manage the risks associated with fluctuations in currency exchange rates.
MAJOR CURRENCIES
The following are the major currencies traded in the market:
U.S. Dollar (USD)
Japanese Yen (JPY)
Euro (EUR)
Canadian Dollar (CAD)
Australian Dollar (AUD)
Swiss Franc (CHF)
British Pound (GBP)
MARKET ACTORS
In general, forex Market actors are from various groups including:
* Customer
* Banks and Financial Institutions
* Broker
* Government
* Business Performer
* Speculators
Customers, such as multinational corporations, to participate in the forex market because they need 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 for 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 and currencies they can buy what they need in the forex market. In addition to central banks and governments, one of the biggest players in forex transactions are banks. Interbank market is a market where big bank transact among themselves and determine the currency price be seen by traders as individual as we do on a computer screen.
Banks, in general, act as dealers who buy / sell currencies at the bid / ask it self. One way the banks make money is to sell the currency at a higher price than he bought to their customers. Because the forex market is not centralized or decentralized, then the natural thing to see one bank with another bank had a slight difference in the exchange rate
Broker is a company with links computer software or phone lines to banks around the world. It is the job of forex broker to find out what bank has the highest level to buy the currency and what the bank has the lowest level to sell the currency.
Using a broker allows the bank to find the best deal available in the world. Forex brokerage firms, but is not related to money itself but only a commission fee for their services.
Government, forex is the most influential actors, the central bank. In many countries, the central bank is an arm of government and its policies run together with the government. However, some governments feel more independent. A central bank more effective in carrying out their duties to boost the economy. Regardless of how indipenden a central bank, government representatives are regularly consulted by central bank representatives to discuss monetary policy. Thus, governments and central banks usually have a package in terms of monetary policy. Central banks often intervene in the market for the purposes of a particular country's economy.
Business Performer, is one of the biggest clients of these banks, those engaged in international transactions. Both businesses are selling goods to international clients or buy goods from international suppliers, they have to deal with the volatility of currency fluctuations. Uncertainty becomes hated by management and business owners. Faced with foreign exchange risk is a major problem for multinational companies. For example: a company in Germany to order equipment from factories in Japan to be paid in yen a year from now. Because exchange rates can fluctuate wildly throughout the year, the German company will not know whether the Euro will be spend more or not at the time of shipment later. One way for businesses to reduce uncertainty due to foreign exchange risk is to go to the spot market and transact directly to the foreign currency they need. But, unfortunately, a businessman may not have enough money on hand to make a spot transaction or do not want to hold the amount of foreign currency which is very much for a long time. Hence business people often apply the hedging strategy to lock a specific currency at a certain price for a position in the future.
Speculators, they were instead to hedging so as not subject to price movements for reasons of international transactions, speculators are trying to earn money by taking advantage of price fluctuations. One of the most famous speculator George Soros possible. Billionaire who is known to decrease speculation in the British Pound generating 1.2 billion dollars less than a month! Some critics say that such people are responsible for the Asian financial crisis of the late '90s.
Meanwhile, the name The Forex market is non-stop cash market where currencies are traded states, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold in local and global markets 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 event.
Forex market is often also called the foreign exchange market, this is a huge market with growing financial and liquid (can deposit and liquidated 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 trading is done through electronic trading networks. Foreign exchange market allows companies, banks and other financial institutions to buy and sell foreign currency, in large quantities.
The main market for the currency markets are "inter bank" where banks, large corporations and large financial institutions manage the risks associated with fluctuations in currency exchange rates.
MAJOR CURRENCIES
The following are the major currencies traded in the market:
U.S. Dollar (USD)
Japanese Yen (JPY)
Euro (EUR)
Canadian Dollar (CAD)
Australian Dollar (AUD)
Swiss Franc (CHF)
British Pound (GBP)
MARKET ACTORS
In general, forex Market actors are from various groups including:
* Customer
* Banks and Financial Institutions
* Broker
* Government
* Business Performer
* Speculators
Customers, such as multinational corporations, to participate in the forex market because they need 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 for 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 and currencies they can buy what they need in the forex market. In addition to central banks and governments, one of the biggest players in forex transactions are banks. Interbank market is a market where big bank transact among themselves and determine the currency price be seen by traders as individual as we do on a computer screen.
Banks, in general, act as dealers who buy / sell currencies at the bid / ask it self. One way the banks make money is to sell the currency at a higher price than he bought to their customers. Because the forex market is not centralized or decentralized, then the natural thing to see one bank with another bank had a slight difference in the exchange rate
Broker is a company with links computer software or phone lines to banks around the world. It is the job of forex broker to find out what bank has the highest level to buy the currency and what the bank has the lowest level to sell the currency.
Using a broker allows the bank to find the best deal available in the world. Forex brokerage firms, but is not related to money itself but only a commission fee for their services.
Government, forex is the most influential actors, the central bank. In many countries, the central bank is an arm of government and its policies run together with the government. However, some governments feel more independent. A central bank more effective in carrying out their duties to boost the economy. Regardless of how indipenden a central bank, government representatives are regularly consulted by central bank representatives to discuss monetary policy. Thus, governments and central banks usually have a package in terms of monetary policy. Central banks often intervene in the market for the purposes of a particular country's economy.
Business Performer, is one of the biggest clients of these banks, those engaged in international transactions. Both businesses are selling goods to international clients or buy goods from international suppliers, they have to deal with the volatility of currency fluctuations. Uncertainty becomes hated by management and business owners. Faced with foreign exchange risk is a major problem for multinational companies. For example: a company in Germany to order equipment from factories in Japan to be paid in yen a year from now. Because exchange rates can fluctuate wildly throughout the year, the German company will not know whether the Euro will be spend more or not at the time of shipment later. One way for businesses to reduce uncertainty due to foreign exchange risk is to go to the spot market and transact directly to the foreign currency they need. But, unfortunately, a businessman may not have enough money on hand to make a spot transaction or do not want to hold the amount of foreign currency which is very much for a long time. Hence business people often apply the hedging strategy to lock a specific currency at a certain price for a position in the future.
Speculators, they were instead to hedging so as not subject to price movements for reasons of international transactions, speculators are trying to earn money by taking advantage of price fluctuations. One of the most famous speculator George Soros possible. Billionaire who is known to decrease speculation in the British Pound generating 1.2 billion dollars less than a month! Some critics say that such people are responsible for the Asian financial crisis of the late '90s.
