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letra de what is forex or foreign exchange market? - mohammadalifa

many businessmen in j-pan access the foreign exchange or forex market every day. giving payment to suppliers in foreign currencies, converting customer payments to j-panese yen from foreign currencies, evading the forex risk arising from future payments in various currencies, or simply getting foreign currency for a trip abroad – all these take place through the forex market. the questions that arise now are what is forex market and how does it function?
what is the forex market?
straightforwardly, foreign exchange refers to the exchange of one currency for another. for business, foreign exchange markets often possess a core purpose, like hedging risk or paying a supplier. people, too, cl-ssically perform these transactions when they are in need of foreign currency, like to go on a vacation by looking for currency exchange locations near me.
however, behind these businesses and individual foreign exchange transactions, are people who are making money by trading currencies. these are referred to as traders. they earn by selling currency at a higher price than the price they buy them for. this difference between the selling and buying price is called spread. the price at which the traders sell the currency or the price at which you buy the currency is referred to as the offer price. similarly, the price at which they buy the currency or the price we sell at is known as bid
long and short positions are taken by forex traders, where long refers to buying more than they sell, and short refers to selling more than the currencies bought. generally, a short position is covered by traders by borrowing
forex brokers are intermediaries who purchase forex trading services and sell them to individual and corporate clients. this is how numerous businesses gain such transactions
overview of the foreign exchange market
the largest financial market across the globe is the forex market. it is also decentralized. this means that no dominant exchanges take place, except for futures trading (standardized forward contracts traded on an exchange). rather, there is a worldwide network of traders and brokers, connected by technology. central banks, retail investors, hedge funds, investment management firms, corporations, and banks, all partic-p-te in the market
the foreign exchange market consists of two parts:
interbank market: the financial inst-tutions and banks trade currencies in order to manage their clients’ forex risks as well as their own. of the two categories, this is by far the larger
retail market: also known as the over-the-counter market, businesses and individuals trade in this market through brokers and online platforms
princ-p-lly, the exchange rates are determined through trading activity by financial inst-tutions and large banks in the interbank market. central banks also make use of the forex market in order to stabilize their currency exchange rates by selling and buying currency in adequate quant-ties to influence the price
the only financial market that operates 24 hours a day worldwide is the forex market. however, it presently closes for two days plus an hour every week, from 4 p.m. est (eastern standard time) on friday, to 5 p.m. est on sunday
which currencies are traded in the forex market?
theoretically, any currency that is not subject to exchange controls by its government of the country can be traded in the forex market. however, practically, the forex is dominated by 4 currency pairs, that are known as the majors. these are:
usd/chf (us dollar/swiss franc)
usd/gbp (us dollar/british pound)
usd/jpy (us dollar/j-panese yen)
usd/eur (us dollar/euro)
although trading in a forex market sounds like a tedious job, it is not in reality. forex trading can be fruitful and earn you a lot of money. however, money does not come to anybody so easily. forex trading has its own risks involved. therefore, you must have a clear understanding of the foreign exchange market before getting involved in it

- mohammadalifa

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