What is the market (Forex)?
What is the currency market ?
Forex currency market (from FOReign EXchange) - The international inter-bank currency exchange market, which replaced the Bretton Woods currency system in 1976, where quotes are formed without restriction on anyone's part. Daily turnover at Forex is several trillion dollars.
More often than not, the term Market is used separately to refer to a completed currency exchange transaction, rather than the totality of transactions conducted on the market.
What is the essence of the market?
The foreign exchange market is based on the principle of free exchange of currencies, which implies no government interference in transactions (no official exchange rate, no restrictions on the direction, price and volume of transactions). This is its basic and most attractive distinction from stock markets. At the same time there are certain rules for provision of intermediary services, which is the relationship between the client (trader) and the intermediary (broker).
Currently, all transactions are carried out through the central, commercial and investment banks, broker-dealer companies, pension funds, insurance companies and other financial institutions.
What currencies are traded in the Forex market?
The main currency in the market is the U.S. dollar (USD). The main currency pairs on the foreign exchange market are pairs of the U.S. dollar with the euro (EUR), pound sterling (GBP), Japanese yen (JPY) and Swiss franc (CHF). Most of the other world currencies are also traded against the U.S. dollar, but cross rates, i.e., currency pairs that do not use the U.S. dollar, are also very popular on the Forex market.
Additionally, the market provides the opportunity to trade gold, silver, oil and other assets whose value is expressed in dollars.
What is the exchange rate or currency quotes in the market ?
A currency exchange rate or quoted market price is the value of one currency expressed in units of another. Since the main currency in the Forex market is the U.S. dollar, the value of other currencies is expressed in U.S. dollars.
What are currency pairs on the currency market?
Currency pair is the main tool of the market and is a currency quotation, expressed in bank currency designations. With the base currency in the first place (on the left) and the quote currency in the second place (on the right).
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For example, the currency pair EUR/USD has the designation EUR/USD, that is, the value of the euro (traded currency) is expressed in U.S. dollars (the quotation currency). In other words, the current quotation of the currency pair EUR/USD at 1.1143 means that at the moment the value of 1 euro is 1 dollar and 11.43 cents at the foreign exchange market.
How to start trading in the market?
The opportunity to trade on the Forex currency market is provided by brokers, dealing centers and commercial banks. Trading is conducted through the client terminal of the selected company. Currently, the most popular trading platforms are MetaTrader 4 and MetaTrader 5. The basis of work in this case is margin trading (with the use of the pledge).
- More about brokers
- Read more about MetaTrader 4 terminal
- Read more about MetaTrader 5 terminal
- More about margin trading