Monday, 21 October 2019

What Is Forex?

Did you know that the foreign exchange market (Forex) is the largest market in the world with an average volume of 5 trillion dollars a day? Trading values in all global stock markets combined do not even approach this figure.


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id you know that the foreign exchange market (Forex) is the largest market in the world with an average volume of 5 trillion dollars a day? Trading values in all global stock markets combined do not even approach this figure. But what does this mean to you? If you take a closer look at Forex trading you will notice a range of exciting trading opportunities that are said to be unmatched in other investment instruments.

FOREX TRANSACTIONS: EVERYTHING IS SUBJECT TO EXCHANGE
If you have already travelled abroad, you have definitely entered into one of the Forex trades. Let's say you live in Britain and decide to go on a tourist trip to France so you need to switch your British pounds to euros. In doing so, the exchange rates between the two currencies - which in turn depends on supply and demand factors determine the number of euro units you will receive against your pound sterling. The exchange rate fluctuates continuously.
1 pound on Monday may equal 1.9 euros. But on Tuesday, you may get 1.20 euros. This small change may seem completely ineffective. But think about it more broadly. For example, a large international company may need to pay its employees abroad. Imagine how a change in the exchange rate could affect its profits if we take the example above, so the exchange of one currency against another may be accompanied by significant costs depending on the time of the exchange? These few sharks can turn into huge sums. Either way, you, as a traveller or an employer may want to keep your money until the exchange rate becomes more favourable.

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