What is Forex?

What is Forex?

WHAT AM I DOING WHEN operated FOREX?
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.