Forex concept

To understand what Forex is, you have to deal in advance with currency and possible transactions with them. As everyone knows, Each country has its own currency. For one reason or another, we sometimes go to exchange and buy euros, because soon we plan to travel, for example, to a European football championship. Rubles do not pay, so you should take with you in advance money that is in circulation in this region. Now almost any Bank has a exchange office where we are given the opportunity to buy dollars or euros, and sometimes a bigger list of currencies. The smartest people are looking for such changes, That will give the best course.

And here everything is logical-why get to 7000 rubles 105 dollars, if you can go a bit further and already in other exchange offices to get 107 dollars. At first glance, it may seem that the difference is no importance, and maybe it is, but not for everyone. And if you imagine that it no longer 7000 rubles change, and all 70,000, the savings can be 20 dollars. So, we approached first important thinking – we’re ready to convert money for foreign currencies, and there are plenty of deals and a reasonable option will choose the most profitable of them. This is about the same model as in the vegetable market – one tomato seller costs 100 rubles per kilogramme, while greenish, plastic smell, and neighboring sellers are more likeable and only 90 rubles a kilogramme. Dollars, although green, but not the tomatoes, the quality is about the same, but the price may vary.

So, above, we see the most primitive example of human interactions with the sale or purchase of currency. The market in which this change is executed is called Forex. The word comes from two people drawn from English- ForeignThis means ForeignForeign, and also ExchangeThat, in turn, item Exchange. Therefore, the general sense that the Forex is becoming clear- Foreign exchange. This is the general name of the big currency market, which includes such small exchange transactions in the Bank’s cash register. And this operation can be called a very first and smallest link in the entire money Exchange system.

What is Forex

Currency market participants

It is an example of cash payment for Forex, when they give rubles and receive a paper dollar or Euro. But at the age of the digital industry development, more and more people turn to payment without cash, keep their savings on Deposit, and money “for a lifetime” pick up from the card, where the salary comes. When a Bank account is opened, employees usually offer to open accounts in euros and dollars, sometimes even free in addition to the major. Having such an account, you can easily transfer money through mobile banking from your ruble account to the dollar. This is the same mechanism as in the case of a cash register, but only now you need not go out – everything is done electronically. Fast, comfortable, and also exchange rates in this situation is better than what is offered in the department. Next is another example of what Forex is.

Now we know that You can switch both cash and without cashYou just need to contact the Bank or converter. A regular citizen who flew once a year and sometimes tops the foreign exchange account at Bank, is a participant in currency tradingWithout being noticed. You just need to look from the other side for example, a person as spent on the 300-500 dollar Vacation, which was previously purchased. If we take the average number of tourists who go abroad each year and spend dollars there, the total amount will be a few billion dollars. That is, in fact, it is an annual demand for dollars, which is necessary to relax, and it is stated in a relatively large volume. And now let’s try to imagine that in our country is also entering a large number of tourists who want to buy ruble – no one on the cash register in the shop will not accept the dollar to pay a bottle of mineral water.

As a result, we get a very complex system, where there are a large number of participants with their different interests. And to it added the spring factor-the foreign country flew in the winter, and tourists to Russia tend to, on the other hand, in summer. Next, you can add various holidays, sporting events and so on, which provides only countless factors affecting how the Act

Any currency purchased. But it’s all little things compared to the Corporate activities and trade relations with other countries. For example, there is a company that deals with the expanded and selling of finished materials abroad, receiving payment in euros. At the time it is necessary to file a accounting report and pay tax, any firm compelled to convert profits in euros into rubles, so that everything is in line with law. Each country has export and import, which creates a broad need for exchange money periodically for other people, All transactions are carried out on Forex-selling or buying money for.

What is Forex

So we already have two large groups of Forex participants Ordinary peopleOperate in small amounts for practical purposes and Legal entitiesWorking with foreigners and compelled to perform certain currency transactions. Many of them may not know what Forex is, but Are participants who are unable to detect in the market. And as in the normal market, if there is high demand for any product, the price to increase, so it happens here. If everyone wants to buy dollars, but there will be some who buy ruble, the Dollar will begin to rise. That is, we get a classic scheme – there are sellers, there are buyers, they are all united in a currency trading frame – another example of what Forex is, what it takes to and how it concerns us all.

The above categories may be called “Participants in brackets“. Now consider those who are aware and without any necessity of buying and selling currencies. These are people or organizations who want to make money on how, due to certain circumstances, one currency is more expensive than others. This most interesting example is the situation of crisis in the economy. If you think back to 2008, when just lazy is not talking about the problem. In the event of uncertainty, people want to at least maintain their capital, they see that the dollar has become increasingly rising to ruble. And this cannot be avoided resulting in an increase in the value of all foreign items (a more interesting example-1998, when the shop shelf is only empty because people want to invest as quickly as possible in at least something).

That is, Ford’s car made in the United States, because it costs 15,000 dollars, and will continue cost the same 15,000 dollars, here is a moderate arithmetic of the cost of production and the interest of the seller, which does not matter what happens in some Because money has spent and sells cheaper is not profitable. But in rubles it can be no 500,000, but one million. At the same time, majority of the residents receive salary in rubles, employers also don’t care what happens to the rates. All this leads to the fact that people go to the exchange and begin to convert rubles to dollars and euros in hopes of saving. So, we get another category of Forex participants- Want not to lose.

Forex Foreign exchange market

Now we move to the most important Foreign exchange market participants who want to cash in changes in exchange rates. For fifteen years ago, it is possible to distinguish the period when ruble at a stable level, that is, dollar is worth about 30 rubles and a bit of fluctuated, then a bit more expensive, then a bit cheaper. Afterwards, the mortgage crisis in the United States and the long period of the world’s economic recession begins. At Forex, this results in the fact that the dollar started to change regularly. Including simple logic, you can draw very simple conclusions – and why not buy dollars for 33 rubles and sell to 35? It would be possible to get, the amount that in rubles would be more. Then wait a little and again buy dollars for 33, and if it turns out, and 32, hold them down and then sell it again expensive. This simple version provides an understanding of the logic of speculators who have a change in the currency exchange rate.

If there are such a market participant, it is logical to assume that there is a whole organization who is meant to make a profit on trading this difference in price. This category is represented by Banks, investment funds, management companies And so forth. They invest Lots of money, sometimes compete against each other and create movement in the currency. Maybe everyone hears about George SorosThat is obtained large amounts of money on the collapse of the English currency. And now imagine that the Forex market uses dozens, hundreds of Soros, each of which wants to enrich themselves. At this point, the usual men need to change the understanding of what Forex is, it is not a ABSTRACT phenomenon, but a very specific example of how people get money basically from thin air, it is a very competitive environment where Everyone wants to snatch their piece. The final link to Forex is a Bank, which operates already hundreds of million dollars.

History and Forex Scales

Let’s move to the number. According to various estimates Less than 5% of total currency volume purchased and sold for practical purposesThat is, for the reason we explain at the beginning. Balance of 95% in respect of Forex trading For the purpose of obtaining. It’s successful, of course, not all, because all in Plus can not go through definition. Forex is a closed system where one gets and another loss. If you buy dollars in 33, and he becomes 32, you may not be angry, but just postpone them “up to the best of time.” But if you are going to buy them for a few million rubles, you will be very careful to evaluate your prospects, you will be very interested in things like the country’s economic performance, Central Bank policy and so on. Having knowledge, Forex can make money very good, because everything is not clear- Whether the price moves up or down. This way, this is the reason that Forex is often compared to roulette and other gambling, but the statement is made usually by uninformed people who essentially do not understand market properties.

Forex in a simple sense

50 years ago, some people knew what the Forex was. Most trades Stocks, raw materials, commodities. But after the US dollar is not tied from gold, that is, a simple piece of paper, initiates a rapid development of Forex. Earnings for the day grew rapidly and at that time it was about orders of magnitude over other sectors of exchange. This is facilitated by the formation of a close economic relationship between the country in the globalisation of globalization framework, as well as the desire to acquire, including by changing the exchange rate of one currency to another. Information technology development allows you to become a Forex participant from the comfort of your home – you can get access to trading only twenty minutes after the easy registration. This is how people become professional market participants, in our case Forex.

To summarize, on the whole hand of the structure and the participants mentioned above are quite simple and clear, but on the other side of the market itself is a very complex mechanism that to understand to achieve success. Forex is not a scam, but a serious part of the world economyThat presents both practical sides and speculative parts. In the first case, it is part of the work of the Organization or the desire of people far from the exchange of not losing money, in the second action-aware of permanent nature, which is intended to make a profit.

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