FOREX or FX is the abbreviation used for foreign exchange. The FX market is said to be the biggest platform for global currency exchange. There are a lot of reasons to do so. Starting off with simple example- if you ever visit a foreign country, then you may need to exchange your currency with the local currency of that place. Similarly, many companies that do trade, import of export stuff to other countries. That is where the role of FOREX comes in.
A
little more about FOREX
Now,
this is how it gets portrayed on trade market- if a country A buys something
from another country B and then coverts the money via FOREX, to pay them.
Country A will be charged the required conversion rates. But there is more
demand of the product, then the country B can show an increase in their
currency rates. This will be seen as profit for the latter.
The
rate of exchange is what matters in forex
trading. This is how people indulge in currency trading by placing one
currency opposing other
Let’s
now peak into the forex trading manual.
Now, as told earlier currency trading is basically using a two currencies
against each other. Thus, this is termed as the currency pair. They are used or
brought with respect with each other. When the investors, or shareholders
invest in currency trading, they buy the currency pair as a whole.
Once
brought, if the market increases then the buyer or investor is in luck or even
if they opt for short sell. But if the vice-versa happens then it will simply
bring losses to the investor. It is like betting on the rise and fall of the
currency pair.
To
invest in any forex currency, instead of the broker paying like stocks, the
forex requires in depositing some minimal amount as a margin requirement. This
can be as less as 2% to high as 20%.
This price basically depends on the rates of a currency in the
particular and the amount of trade.
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