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Forex Market
The Forex market (from the English foreign exchange market) is a global international market for currency exchange at non-fixed prices. The price of a currency is formed only on the basis of an agreement between the parties to the transaction and depends on the supply and demand for that currency at the moment.
Forex is a place where you can earn your first million dollars with a small investment. But it is also worth remembering that in one moment you can lose everything.
The result of your activity in the Forex market will depend on the risks that you will assume while working.
How did the forex market appear?
In July 1944, an international monetary fund was established in the American city of Breton Woods. 44 states have concluded an agreement on the establishment of a fixed exchange rate system. The unit of measurement of currencies in this system was gold. The price of one ounce of gold was set at $ 35. The currencies of all other member countries of the fund were connected to the US dollar at a fixed rate. Despite this, it was still possible for the participating countries to change the value of the national currency in case of emergency. The IMF system worked flawlessly for 20 years, but by the beginning of the 70s, it began to falter. In 1971, US President R. Nixon canceled the free conversion of the dollar into gold, refusing to participate in the IMF agreement. The Smithsonian Agreement enters into force in December 1971, which allowed the fluctuation of exchange rates to 4.5% against the US dollar instead of the previous 1%. In 1976, in the city of Kingston (Jamaica), the Council of Ministers of IMF member countries adopted an agreement on a new structure of the monetary system, according to which free-floating exchange rates are becoming the main currency exchange method. Money no longer has an official value in gold, and since then money has been exchanged on the free foreign exchange market.
How does the forex market work?
The ability to work with the Forex market allows you to earn on currency fluctuations in almost any situation. Suppose you notice a rise in prices for a certain currency. At this point, you can sell other types of currencies, buy one that grows in price, wait for the maximum cost and profitably sell it. One of the main terms in working with Forex is the concept of the currency pair rate. So called the unit of one currency, expressed in units of another. For example, the expression “the exchange rate of the American dollar against the Russian ruble is equal to 29.56” means that one US dollar is worth 29.55 Russian rubles. Thus, having developed your own strategy of working with the foreign exchange market, you can get a good profit. It is quite natural that the desired result cannot be achieved from the first time, losses due to their own mistakes are possible, or, conversely, due to unforeseen circumstances. Also, for profit it takes a certain time.
The main advancement of the Forex market is due to the movement of capital between the leading countries of the world, as well as the technical analysis of quotes and forecasting possible prices.
Participants in the Forex market
Forex (foreign exchange market, forex) is an international market in which banks exchange different currencies. To understand how huge this structure is, we note that the turnover of foreign exchange transactions averaged $ 1 billion in 1 day in 1977, and in 1997 a little more than $ 1 trillion. Dollars, and in 2010 - already 4 trillion. Dollars. According to forecasts, by the end of 2020 the daily turnover will exceed about mark in 10 trillion. Dollars.
Forex operates almost 24 hours a day: when the stock exchange in Tokyo (at 11 am Moscow time) ends, the stock exchange in London begins to work, and 1.5 hours before its closure (at 16:30 Moscow time) the financial market opens New York.
Among the main participants in the Forex market are the following categories:
- Central and commercial banks, the objectives of the first include the regulation of the national currency, as well as the impact on the economic situation of their country; the latter are the holders of accounts through which other participants conduct their operations;
- investment funds placing funds in the assets of foreign firms, as well as companies that carry out trade transactions with organizations in other countries. For doing business with foreign partners, importers buy currency, and exporters sell it through Forex;
- Currency exchanges, brokers. Currency exchanges exist in some countries, with their help legal entities carry out currency exchange, in addition, the functions of such exchanges include regulation of the market exchange rate. Brokers act as intermediaries between buyers and sellers of foreign currency, while charging a certain commission for their services;
- Private individuals - since 1986, any person can invest free financial assets in this market. The number of individuals wishing to make a profit on Forex is constantly increasing. Thanks to certain knowledge, anyone can work on Forex and earn money.
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Forex Market
