FOREX Earn Easy Money

The foreign exchange market (also known as Forex, short for Foreign Exchange term) is a decentralized world market where currencies are traded. This market was created to facilitate the cash flow derived from international trade. The daily volume of transactions carried move about 5 billion US dollars (USD) per day has grown so much that, at present, total transactions in foreign currency that is because international transactions of goods and services represent a percentage almost residual, it being most of them to purchase financial assets. Consequently, this market is quite independent of the actual business operations and changes between the price of two currencies can not be explained exclusively by changes in trade flows.

The foreign exchange market is unique because:

The volume of transactions

Extreme market liquidity.

The large number and variety of participants in the market

Its geographical dispersion

The time in which it operates - 24 hours a day (except weekends).

The variety of factors that generate foreign exchange rates.

The volume of currency to be traded internationally, with a daily average of US $ 5,345 billion, operating in one day what Wall Street can operate in a month in the stock market.

The currency futures contracts were introduced in 1972 at the Chicago Mercantile Exchange and Chicago Stock Exchange and is one of the contracts that are most actively traded. The volume of currency futures has grown rapidly in recent years, but accounts for only about 7% of the total volume of the foreign exchange market, according to The Wall Street Journal Europe (5/5/06, p 20). The ten most active participants accounted for almost 73% of trading volume, according to The Wall Street Journal Europe, (2/9/06 P. 20).

Large international banks provide the currency market a purchase price (bid) and selling another (ask). The spread is the difference between these prices and normally constitutes remuneration to the entity for its role as intermediary between the buying and selling using their channels. Usually the spread in most traded currencies is only 1-3 pips or basis points (which is the minimum amount that can change the price of a currency). For example, if the bid (bid) at a price of EUR / USD is 1.2200 while the Ask (selling price) is set to 1.2203 can be identified clearly Spread 3 pips.

Forex is an abbreviation commonly used for "foreign exchange" or "currency exchange" and is often used to describe the trading in the forex market by investors and speculators.

For example, imagine a situation in which it is expected that the value of the US dollar it will weaken against the euro. A forex trader in this situation will sell dollars and buy euros. If the euro strengthens, the purchasing power to buy dollars has increased. The trader now can buy back more dollars than it had at the beginning, at a profit.

This is similar to stock trading. A stockbroker buy a stock if you think the price increase in the future and will sell a stock if you think its price will fall in the future. Similarly a forex trader will buy a currency pair if you expect the exchange rate to rise in the future and sell a currency pair if you expect the exchange rate to fall in the future.

WHAT IS AN EXCHANGE RATE?

The forex market is a global and decentralized market determines the relative values of different currencies. Unlike other markets, there is no central repository or exchange where transactions are carried out. Instead, these operations are performed by various market participants in several places. It is rare for two coins have an identical value to each other and it is also rare that two currencies remain the same relative value for more than a short period of time. In Forex, the exchange rate between two pairs of currency changes constantly.

For example, the January 3, 2011, one euro was worth about $ 1.33. On May 3, 2011, one euro was worth about $ 1.48. The euro has appreciated 10% against the dollar US during this time.