Forex, also known as foreign exchange, FX or currency trading, is a decentralized international market where all of the world’s currencies trade. All the world’s combined stock markets do not even come close to this. But what does that mean to you? Just take
a closer look at forex trading and you might discover some exciting trading opportunities unavailable along with different investments.
If you have ever traveled overseas, you have made a currency transaction. Have a trip to France and you convert your pounds into euros. When you do this, the forex exchange rate between the two currencies–based on supply and demand determines the number of
euros you buy for your pounds. And the foreign exchange rate fluctuates continuously.
A single pound on Monday can get you 1.19 euros. This very small change may not seem like a big deal. But think of it on a larger scale. A large international company may want to pay overseas employees. Imagine what that might do to the bottom line if, like in
the example above, simply buying one currency for another costs you longer depending on if you get it done? These few pennies add up quickly. In both cases, you –as a traveler or a business owner–may want to hold your money until the currency exchange rate
is more favorable. Foreign Exchanges have very high quality Forex VPS to handle the information flowing during the trade.
OPPORTUNITIES IN FOREX: WHAT’S YOUR OPINION?
Just like stocks, you are able to trade money based on what you think its worth is (or where it’s headed). But the major difference with forex is that it is possible to trade up or down just as easily. If you think a currency will likely increase in value, you can purchase it. If you believe that it can decrease, you can sell it.
Using a market this big, finding a buyer when you’re selling and a seller after you’re purchasing is a lot easier than in in different markets. Perhaps you hear about the news that China is devaluing its currency to draw more overseas business into its country. If you feel that trend will last, you can earn a forex trade by selling the Chinese currency against another currency, say, the US dollar.
The greater the Chinese currency devalues against the US dollar, the higher your profits. If the Chinese currency increases in value at the same time you’ve got your sell position open, then your losses increase and you want to get out of the trade.