Introduction to Forex

The abbreviation for Forex is Foreign exchange. It is a process that, when understood
will benefit over a long run. It primarily focuses on the worlds trade market which is for
obvious reasons is the world’s biggest financial market.

Foreign exchange, widely known as ‘FX’ or ‘Forex’, is the exchange of one currency for
another at an agreed exchange price on the over-the-counter (OTC) market. The vital
element for the foreign exchange markets popularity is the fact that the foreign
exchange market is open round the clock i.e. 24 hours on weekdays, this begins on
Sunday evening and goes on till Friday night. This ensure that prices are available for
trading 24 hours will ensure the traders that the possibility of price gapping i.e. major
hike or depreciation of the prices is very low.

This gives an opportunity to the traders to invest whenever they want. Irrespective of
time Foreign exchange is a margined (or leveraged) product, which suggests that one is
only required to deposit a small percentage of the full value of ones position to place a
forex trade meaning that the potential for profit, or loss, from an initial capital outlay is
majorly higher than in customary trading.

We live in a digital world where even though the countries are geographically separated,
they are connected by a powerful means called the internet through which everything
seems to be click away. Trade and commerce are major contributing factor for this.

Trade in simple words mean buying and selling of goods and when the same happens on
a large scale it can be termed as commerce. Now, trade between two countries involves
more than just the buyer and the seller. It includes the market price and the market
exchange rate.

An important contributing factor in determining a country’s relative level of economic
health is Foreign Exchange rate. It provides a window to the country’s economic
stability, and this is the reason why the swings of the foreign exchange rates are so
closely monitored and analysed. It gives us a great understanding regarding when we
need to send money overseas and when it will be beneficiary to receive the money from
overseas. To have a better understanding regarding foreign exchange rates role and to
trade successfully in Forex click on the link.

The exchange rate can be well-defined as “the price at which one country’s currency can
be converted into another country’s currency.” It fluctuates daily with the changing
market. Key contributing factors for this are forces of the supply and demand that the
currencies have from one country to another country. For these reasons it is important
to understand what determines exchange rates.