What is Forex? How Does Forex Earn Money ? - Support 4 Investment
What is Forex?
In short, it is a global market that allows someone to exchange two coins with each other. If you think a coin will be stronger in front of the other, and you end up correctly, then you can get a gain. If you have traveled to another country, you generally have to find a currency exchange room at the airport, and then change the money you have on your wallet in the country currency you visit.
You climb to the counter and see the screen that shows different exchange rates for several coins. The exchange rate is the relative price of two currencies from two different countries. You find "Yen Japanese" and think about yourself, "Wow! A dollar that was 100 yen?! And I have ten dollars!
When you do this, basically you participate in the currency market?
You have changed a coin from the other. Or at the term Trade Forex, assuming that you are a US Japan who visits, has sold dollars and bought a yen.
Before flying back home, it stops at the currency exchange stand to exchange the yen that is miraculously (Tokyo Caro!) And paying attention to the exchange rate has changed.
This change in the exchange rate that allows you to earn money in the currency market.
The foreign exchange market, which is usually known as "Forex" or "FX," is the largest financial market in the world.
The FX market is a global and decentralized market where the world currency shifts hands. Changes to exchange rates per second so the market is constantly in flux.
Only a small portion of currency transactions that occur in the "real economy" that involves international trade and tourism such as the example of the airport above.
Conversely, most currency transactions that occur in the global foreign exchange market are purchased (and sold) for speculative reasons.
Currency traders (also known as currency speculators) buy currencies that they will be able to sell them at higher prices in the future.
Compared to the volume of "honey" of $ 22.4 billion per day from the New York Stock Exchange (NYSE), the foreign exchange market looks very ginormous with a trading volume of $ 6.6 trillion per day.
Trillion with "t".
Let's take a moment for entering this into a perspective using monster ...
The largest stock market in the world, the New York Stock Exchange (NYSE), trades a volume of around $ 22.4 billion every day. If we use monsters to represent NYSE, it will look like this ...
It looks scary. It seems that it works. Some can even find it sexy.
You hear about NYSE in the news every day ... in CNBC ... in Bloomberg ... on the BBC ... Heck, you might listen to it in your local gym. "NYSE now, blah, blah."
When people talk about "markets", they generally mean the stock market. So a big NYSE dream, it's noisy and likes to make a lot of noise.
But if you really compare it with the currency market, it will be like this ...
Oooh, NYSE looks very punished compared to the currency market! It doesn't have a chance!
It makes you ask whether "s" in NYSE means "stock" or for "scrabbny"?
Look at the average daily trading volume graph for currency markets, New York Stock Exchange, Tokyo Stock Exchange and London Stock Exchange:
Currency market more than 200 times bigger! It's great! But hold your horse, there is an arrest!
A large amount of $ 6.6 billion includes the entire global currency market, but the "spot" market, which is part of the relevant currency market with most foreign exchange traders, smaller than $ 2 billion on the day.
And then, if you just want to tell the trading volume everyday retail traders (it's ee. Law), even smaller.
It is very difficult to determine the exact size of the retail segment of the FX market, but it is estimated that around 3-5% of the volume of Daily FX negotiations in general, or around $ 200-300 billion (maybe less).
So, you know, the currency market is definitely big, but not so big, because the others want you to believe.
Don't believe that "Forex is a $ 6.6 billion market"! The big number sounds amazing, but a little cheat. We don't like excessive. We remain real.
Regardless of its size, the market is also rarely closed! It's almost open all the time.
The Forex market is open 24 hours a day and 5 days a week, only lid for the weekend. (What a lot of Holgés!)
So it's not like the stock market or bonus, the currency market doesn't close at the end of every working day.
Conversely, trading only changes in different financial centers throughout the world.
The day began when traders woke up in Auckland / Wellington, then moved to Sydney, Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally, New York, before you began to praise fully in Wellington.
