FOREX as the International foreign exchange market allows any person to trade one currency against another. The rate of exchange sets a fraction of every currency in this exchange.
Currently, money market Forex has a turnover of more than $3 billion per day that is significantly greater than those of other world markets. Volumes of transactions at this market can be free, as well as account days.
Participants of money-market use FOREX for achievement of one or several purposes, such as:
Backing of trade and investments.
Companies-importers buy foreign exchange for getting goods abroad and selling it in home country. Companies-exporters get an export proceeds in foreign currency, which they need to exchange for national currency to cover costs etc.
Hedging
Export trading companies are exposed to risk of changes in the exchange rate of their national currency and currency of that country where they realize their production. Unfavorable changes in the exchange rate can lead to serious losses. Foreign exchange market FOREX allows the company to insure itself from changes in the exchange rate and, accordingly, to reduce the risk of possible losses.
Speculative trading.
The exchange rates depend on demand and supply conditions of every currency. Stock market traders can become profitable, simply buying a certain currency at the lower rate and then selling it at the higher rate, or selling at higher rate and buying at lower rate. Speculative trading accounts for the major portion of transactions of money-market FOREX.
International foreign exchange market FOREX is an over-the-counter market and it functions round the clock worldwide in the various financial centres. Nevertheless, derivative instruments trades are going on at the exchanges.
Early in the morning trade begins in Asia, then financial centres open in Europe and, at last, in the USA.
The main volume of transactions has no direct connection with international trade or investments. The majority of such transactions are put into effect by banks with the view of making money. Foreign exchange markets, being over-the-counter, work in different parts of the world. Working hours superimpose, that’s why money-market functions day and night, 24/7.
Every second of FOREX’s work, hundreds of buying and selling transactions are taking place. Currencies, which are in the transaction, can be identified by a three-letter code which is used in payment system S.W.I.F.T., for example:
• USD - the US dollar
• JPY - Japanese yen
• GBP - Great British Pound
• EUR - Euro
• CHF - Swiss franc
• CAD - Canadian dollar
• AUD - Australian dollar
Rates of exchange are the rate at which the currency unit of one country may be exchanged for that of another. The codes of rates are 6- letter words, which are composed of two 3-letter codes of currencies. As a rule, there is a code of more powerful currency on the first place.
The choice of a foreign currency trading service is not an easy task. And one shouldn't hurry up to make a decision on such a service.
It is very important that you follow a final piece of advice - today the Internet technologies give you a really unique chance to choose exactly what you require at the best terms which are available on the market. Funny, but most of the people don't use this chance. In real life it means that you must use all the tools of today to get any foreign currency trading info that you need.
Search Google or other search engines. Visit social networks and check the accounts that are relevant to your topic. Go to the niche forums and participate in the discussion. All this will help you to create a true vision of this market. Thus, giving you a real chance to make a smart and nicely balanced decision.
P.S. And also sign up to the RSS feed on this blog, because we will everything possible to keep this blog tuned up to the day with new publications about the topic of foreign currency trading and important trends on the currency exchange market.
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