ویزترید

Forex Market

The Forex market offers traders a huge opportunity to earn on fluctuations in the currency markets. The market is really wide, but the principle of the foreign exchange market is quite simple, unlike other financial markets

What is the Forex Market?

The currency exchange market (or Forex, Fx) is a global decentralized market where currencies are traded.

It does not have a separate platform for operations. On the contrary, traders and other market participants carry out transactions electronically on the OTC (over-the-counter) principle, that is, outside the exchange.

Forex is the largest financial market in the world, and the volume of transactions on it is constantly growing. The daily turnover is $ 5.1 trillion, and 80% of this amount falls on the so-called speculative transactions, opened with the aim of making money on changes in rates.

Such figures indicate that the liquidity of the market is extremely high, and the offer to sell and buy currencies is huge. This means that it is very easy to make a sale and purchase transaction, and exchange rates can change very quickly.

How to Trade Forex

Now that we have answered the question "What is the Forex market?", let's take a closer look at how the Forex market works.

Operations in the foreign exchange market involve the simultaneous purchase of one currency and the sale of another. This means that the value of one monetary unit can be expressed in terms of the quantity of other monetary units. An outside observer may conclude that Forex trading is speculation on the ratio of such rates.

Here's how it all goes:

Each currency pair consists of a base currency (it comes first) and a quote currency (it comes second). A currency pair shows how many units of the quote currency will be needed to buy a unit of the base currency. Let's take the EUR/USD pair. If you think that the euro will rise against the dollar, you can buy the EUR/USD pair. By buying or, in other words, opening a long position, you are selling the quote currency and buying the base currency. That is, you buy EUR/USD at a lower price in order to sell it at a higher price in the future. The difference will be your profit. If you think that the euro will fall against the dollar, you sell EUR/USD or open a short position. In this case, for the euro you buy the US dollar.