People can earn income from many types of businesses, but one of the most important areas to record high profits is Forex trading. There are many types of exchanges or markets, where stocks, assets, currencies, stock indices, bonds, etc. can be traded.

One of these markets is the Forex market or the foreign exchange market. Forex is the largest trading market in the world. Transactions here influence everything from the price of clothing imported from China to the price paid for a cocktail on vacation.

Where does Forex come from and what does trading mean?

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Forex stands for Foreign Exchange. This term refers to currency exchanges. Forex is therefore a decentralized market where one currency is exchanged for another currency at a price agreed upon by all buyers.

Trading is an English word and means trade, trading, exchange. In other words, it is a term specific to the trade area.

As far as Forex trading is concerned, it is a speculative activity that is part of the process of trading instruments (currencies) in order to obtain a profit.

Who can do Forex trading?

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To be able to be active in a trading market, it is necessary to have multiple knowledge in the financial field. It is especially important to know the process, terms and tools needed to be able to carry out such a transaction. A thorough study of the market is imperative because the Forex market is a very risky one.

Those who carry out transactions on a financial market are called traders, with the aim of selling and buying financial assets, for themselves or for their clients, so as to obtain a profit from that transaction.

There are also brokers on the Forex market. They have the role of giving their clients access to this financial market, making available, in case of need, even liquidity. Thus, the customer can complete a transaction. The broker is, in particular, an intermediary whose earnings come from commissions received from his clients.

However, anyone who wants to can trade on the Forex market:

What do Forex investments entail?

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Currencies are some of the most volatile instruments traded in a financial market. Therefore, their price changes from moment to moment, but this is precisely what characterizes the Forex market and why investors are attracted to this activity.

Forex Trading runs freely, being a decentralized market with unregulated transactions, as is the case with a stock exchange, for example. Thus, its mode of operation is quite simple. Traders buy a currency when it is at its lowest price and sell it when its value has risen sharply, with the difference between the two prices representing the traders’ profit.

An important aspect that characterizes the Forex market is the fact that it is open 24/5 ie 24 hours, 5 days a week. On weekends, such transactions are usually not carried out.

Which are the factors that influence currency volatility?

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Any action, decision or event that takes place at a global level can influence the way the Forex market is presented at a given time, but especially the quotes on this market. In addition to being a financial instrument, they are also an economic indicator for the country they represent, just as stocks are in the case of companies.

Therefore, any decision of the Government or the Central Bank of a state will influence the quote that the currency of that state will have on the Forex market, which depending on the nature of the decision/event, the value of the currency will increase or decrease.

Among the most important factors influencing the Forex market and currency quotes are:

However, Central Banks have the greatest influence on the changes in the Forex market, through the monetary policy decisions they adopt. In addition, Forex quotes can also be influenced by other factors such as:

Which is the most popular currency in Forex Trading?

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The most important markets in Forex Trading are found in New York, London, Sydney and Tokyo. In general, traders buy and sell pairs of two currencies, their quotation being made based on the value that one of the currencies has in exchange for the other.

There are many currencies on the market, but currency pairs can be divided into four groups:

Conclusions

Therefore, the Forex market is the largest trading market in the world, which includes almost all the currencies of the globe. In addition, it generates transactions of impressive amounts, they even reach 5,000 billion dollars per day.

This is also due to the fact that every individual who has at some point exchanged one currency for another, thereby making a profit, has unconsciously participated in Forex Trading. However, most such conversions are done strictly for profit.

However, if you want to enter this market, it is recommended to have a training period both in terms of the trading process and a practice period on a demo account. Thus, the Vestor team offers you trading courses to achieve success in currency transactions. Contact us for more details!