What About Forex?

What About Forex? - Forex Trading is trading currencies from different countries with each other. Forex stands for Foreign Exchange. For example, in Europe the currency in circulation is called 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. Meanwhile, the name The Forex market is a non-stop cash market where currencies are traded states, usually through a broker. 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.

The Forex market is often referred to as the foreign exchange market, this is a large market with growing financial and liquid (can deposit and liquidated at any time), which 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 through the electronic trading network. The foreign exchange market enables companies, banks and other financial institutions to buy and sell foreign currency, in large quantities.

The primary market for currencies is the market "inter-bank" where banks, large corporations and large financial institutions to manage the risks associated with fluctuations in currency exchange rates.

Major Currencies 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)

Actors in the Forex Market:

Customers, such as multinational corporations, to participate in the forex market because they require foreign currency for their trade in other countries. Like for example, a certain 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 rate, and they can buy the currency they need in the forex market. In addition to the central bank and the government, one of the greatest actors in forex transactions are banks. Interbank market is a market where large bank2 transactions between them and determine the price of the currency to be like that seen by individual traders like us on a computer screen.

Banks, in general, act as dealers who buy / sell currencies at the bid / ask of her. One way these banks make money is to sell the currency at a higher price than he bought to their customers. Since the forex market is not centralized alias decentralized, so it's normal to see a 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 the forex broker to know what bank has the highest rate to buy a currency and what the bank had the lowest levels to sell the currency.

By using a broker is possible for banks to find the best deal available in the world. Forex brokerage firms, but does not deal with his own money 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 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. 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 involved 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 a thing despised by management as well as business owners. Dealing with 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 one year from now. Since 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, businessmen may not have enough cash on hand to make the spot or did not want to hold the amount of foreign currency which is very much for a long time. Therefore businesses often implement hedging strategy to lock specific currency at a specific price for the purpose of positioning in the future.

Speculators, they are not men-hedging price movements so as not taxable for reasons of international transactions, speculators trying to make money by taking advantage of price fluctuations. One of the most famous speculator George Soros might. Millionaire who is known for speculation on the decline in the British pound 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.