What is Forex?
Forex, also referred to as foreign exchange, FX or money trading, is a decentralized global marketplace where all the world’s currencies trade. Each of the world’s combined stock markets don’t even come close to this. However, what does this mean to you personally? Take a closer look at forex trading and you might discover some exciting trading opportunities unavailable with other investments.
FOREX TRANSACTION: IT’S ALL IN THE EXCHANGE
If you have ever traveled overseas, you have made a foreign exchange transaction. Have a trip to France and you convert your pounds into euros. When you do this, the forex exchange rate between the two currencies–based on supply and demand –determines the number of euros you buy for your pounds. And the foreign exchange rate fluctuates continuously.
A single pound on Monday could allow you to 1.19 euros. This very small change might not seem like a huge deal. But think of it on a larger scale. A big global company might want to cover overseas employees. Imagine what that could do to the bottom line if, like in the case above, simply exchanging one currency for another costs you more depending on when you do it? These few pennies add up quickly. In both cases, you as a traveler or a business owner–might choose to hold your money until the currency rate is more favourable.
OPPORTUNITIES IN FOREX: WHAT’S YOUR OPINION?
Just like stocks, you can trade currency based on what you believe its worth is (or where it’s headed). Nevertheless, the major difference with forex is that you’re able to trade up or down just as easily. If you think a currency will likely increase in value, you can get it. If you think that it will decrease, you can sell it. Having a market this big, locating a buyer when you are selling and a seller once you’re purchasing is a lot easier than in other markets. Maybe you hear on the news that China is devaluing its currency to draw more foreign business into its country. If you believe that trend will last, you could earn a forex trade by selling the Chinese currency against another currency, say, the US buck. The greater the Chinese currency devalues against the US dollar, the higher your profits. Just check out cheap forex vps hosting and have the opportunity while is not late. If the Chinese currency increases in value while you’ve got your sell position open, then your losses increase and you would like to escape the trade.