How Does Forex Work?
How do currency markets work?
You will need
- - access to the Internet;
- - trading terminal.
The international currency market is the exchange of a variety of national currencies. The market operates five days a week: it opens on Sunday evening at 23:00 GMT and closes on Friday evening at 22:00.
Forex currency exchange is carried out by various organizations and individuals. Among the leading players can be noted state and large private banks, they set the basic dynamics of the movement of currencies. In particular, state banks maintain their currencies in a certain corridor.
Private banks, as a rule, make the purchase and sale of currency on the order of their clients - commercial enterprises. In addition, they often produce their own speculative operations for profit. Finally, many companies work in the foreign exchange market, earning solely on changes in the market value of currencies.
There are private speculators in this market,A good example is George Soros, who once collapsed the British pound bank rate and earned billions of dollars from this speculation. In addition, there are hundreds of thousands of small traders in Forex who are also trying to make money by changing the value of currencies.
Forex is often called the interbank market, because initially the transaction took place between banks. But with the advent of the Internet, the circle of its participants has expanded considerably. Currently, anyone can work on Forex without leaving home, it’s enough to have access to the network. Trading is carried out through brokerage companies or banks that provide brokerage services.
For direct trading, a trading terminal is used - a special program installed on a computer. In the terminal, you can see the graphs of movement of currencies of interest to the trader and in a few moments to carry out operations for buying and selling.
During the day in the foreign exchange market there are periods of growth and decline in activity. This is due to the fact that at various times one or other regions are connected to trade.So, the Pacific session begins first (at 23:00 Moscow time), then Asia is connected to trade (Asian session, 3:00). Then Europe enters the trade (European Session, 10:00). Finally, at 4:00 pm America (American Session) enters the market. Adjacent sessions may overlap — for example, from 4:00 to 8:00 pm, Europe and America are immediately present on the market. After 8:00 pm, when Europe closes (London is the last to leave), America reigns in the market until the next offensive of the Pacific session.
Work in the foreign exchange market requires very serious knowledge acquired over the years. Many people, attracted by the information that you can make very good money in Forex, start trading without having experience and knowledge. As a result, lose their money. It is necessary to understand that in the speculative trading there is a simple principle - in order for you to earn, someone must lose. Money in Forex does not come out of nowhere - someone loses them, someone wins. The vast majority of newbies entering this market lose their money.
Video: Lesson 1 - What is Forex and how does It work?
How Exchange Rates Work
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