All trades take place between 2 different currencies resulting in the simultaneous purchase of 1 currency with the sale of another. Currencies are quoted in pairs, like the EUR/USD. The 1st listed currency is known as the base currency, while the second is known as the counter or quote currency. The base currencywill be the basis for your buy or the sell. If you buy EUR/USD you have bought Euros and simultaneously sold dollars. You'll do so at any time you expected the Euro to appreciate (go up) relative to the US dollar.
The fundamentals of Forex aren't complicated: You buy a currency when it's low, sell when it is high, and take a profit. One may even make a profit by selling high and then buying low. Like every other market there's a bid/offer spread. The bid/offer spread relates to your buying and selling spread between both currencies. The bid price is the price at which it is possible to sell the currency. The ask price is the price at which you are going to be able to buy the currency. It requires time and practice to learn to predict the fluctuations in the Foreign Exchange market and become successful a Forex trader. There are many factors that affect the price of a specific currency in relation to its value against other currencies; from the national economic outlook to political change. A successful Forex trader learns how to have the benefit of these factors through fundamental or technical analysis. There are tons of educational materials available online, that will enable one to develop your own analysis for the Foreign Exchange markets.
The Foreign Exchange market has no single universal exchange. Fx trading is conducted electronically over-the-counter (OTC), which implies that all transactions occur via computer networks between traders all around the world; as opposed to on one centralized exchange. The Foreign Exchange market is open 24 hours per day, five and a half days a week. Currencies are traded worldwide in all the key financial centres, each with its own regulatory body. Within the UK the regulatory body is the FSA (Financial Services Authority).The need to exchange currencies is the primary reason why the Foreign Exchange market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around $4 trillion per day. So if you're looking for a market to trade, then look no further than the Forex market. All that you need is a PC, an internet connection and a Foreign Exchange Broker. I hope that this short article has helped with your understanding of the Forex market, for more information please visit BrokerComparison.co.uk
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