Forex operation principle

Distinctive features of the Forex market


The subject of trading in the Forex market is the currency. The dynamics of exchange rates and the ratio of currencies directly determine profits in the foreign exchange market. Distinctive features of the market are a significant range of loans, as well as a high rate of transactions.
The main participants of the Forex market are investors, banks, brokers and funds (for example, retirement funds).
In Russia, the Forex market most often refers to speculative currency trading using leverage (or margin trading). In fact, making profit on exchange rate differences is not the only possible goal of Forex operations. They can also be trading, speculative, hedging and regulating.
Today, daily Forex turnover exceeds 4 trillion p. The main volume of operations is focused on the London and German markets. About 2/3 of the total traded currency accounts for the dollar. Trade in the Forex market is carried out five days a week with weekends on Saturday and Sunday.

Forex Market Structure


The principles of the Forex market do not depend on the country in which the auction takes place. Meanwhile, there are inter-country differences in trade approaches. It is believed that the American and Asian sessions are the most aggressive, and the Australian and New Zealand - the most restrained.
The principle of trading is as follows: the investor concludes a contract for the purchase of one currency for another. For example, dollars for euros or yuan for rubles. In this case, the investor must make a certain amount on your deposit. It is usually less than the required amount, i.e. he essentially takes a loan from a trader to buy foreign currency.
This loan is called leverage. In fact, this is the ratio between the amount of collateral and borrowed funds. Most transactions in the Forex market are made using leverage. It can have different values ​​- from 1: 1 to 1: 500. The most popular and balanced leverage is with parameters 1: 100. With such a leverage, the broker on the deposit should have an amount 100 times less than the transaction made. Those. to complete transactions in the amount of $ 100,000, he must have a deposit of $ 1,000.
After acquiring a currency, the investor's profit depends on the movement of currency rates. If the purchased currency grows, the investor makes a profit; if it falls, respectively, the loss. The direction of movement of currencies depends on a complex of factors (economic, political, social, etc.). For the investor, the main thing is to correctly predict how the currency will behave and to have time to buy or sell it.

Date: 09.10.2018, 12:44 / Views: 81363

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