General Info About Forex
Forex is an abbreviation of foreign exchange market, and is also known as currency market. Forex is a decentralized market on which currencies are traded. It is the largest market because of the volume of trades that happen on it. I kind of prefer working with the canuck method. Price of a currency is considerably influenced by a volume of trades it participates on a forex market. Biggest players on forex currency market are international banks.
Forex currency trading works on a few levels, you may or may not be aware of. There is a behind the scenes trading between the banks and within the banks which is called interbank market. Most of the “dealers” on foreign exchange market are those banks, but there are few other players that act as dealers, those can be other financial firms and insurance companies.
Forex has no supervisory obligations in trades that happen.
Forex also acts as a assistant in a international trade of goods. It allows company to pay for goods from other currency based country in the currency of country that is selling goods, even though the buyer works with its own currency.
Forex is considered a place of perfect competition between parties, and only thing that can disturb that competition are countries that invest money to support its own currency.
You must be familiar with currencies if you want to earn money
Trading on forex is a bit complicated thing to discuss. In order to earn money by trading on forex you have to be familiar with different currencies and many other things. You earn cash by buying other currency with your own. The point of that is to buy a currency that is weak but you know it will get strong in future and thus your amount of that currency will have more value. This is a very simple explanation, there are a lot more things you need in order to trade currencies on forex.
A great part of forex trade comes from commercial companies that seek foreign goods. They trade in small amount of money and thus have little impact on currency value. On the other hand multinational corporations can cause big and sudden impacts on value of some currencies because of exposures which don’t reach other parties.
Banks as steady traders
Central banks are big players on forex.
Their role is to keep their country’s currency on an often fixed value. They can use reserves of other currencies in order to keep it so. And because they have a role of keeping inflation low they tend to invest in their currencies to keep them steady. They don’t play to win ( to earn money ). And if they lose money on forex they can’t go bankrupt, unlike everyone else.
In order to cash on you have to follow the events that happen in countries whose currency you are interested in. They central banks can and will influence the value of their currency and that is a way of earning money. But most of the trades are based on speculations. In order to speculate correctly you have to follow events and know what can influence what. Or you simply buy binary robot system like Millionaire Blueprint and enjoy in your earnings.