HOW FOREX TRADE EXIST ? Foreign exchange or in layman’s terms the currency exchange is one of the most significant financial market services in the world.
It is even more significant than the stock market and is responsible for a lot of global implications.
read more:REVOLUTION SYSTEM ON BITCOINS TRADING
Travel and currency change is a part of our day to day lives. When you have to make purchases on an international website, or visiting a new country, you are faced with the problem of getting a different currency.
Most international banking credit and debit cards would work everywhere both online as well as offline but to change your cash, you would have to visit a Forex exchange.
HOW FOREX TRADE EXIST ?
Every currency doesn’t have the same value as others. It is this change in worth that drives the Forex market. There are specific exchange rates that can be set up by a Forex exchange.
The exchange rate is the amount that you have to pay in your currency to get different money.
There are many different currencies in existence today, but most Forex trades are done with just a few like the British Pound, EU Euro, US Dollars, Japanese Yen.
These have set the industry standard in the Forex trading industry. There are other popular currencies in the trade as well, which include
Where can you convert your currency?
Forex is traded at many fronts 24/7/365 days a week. They are traded by many different varieties of players in the game, namely –
Banks
Interbank Forex trade is common where different banks trade on currencies when their clients require them to. This transaction is enormous, and banks profit on the currency fluctuations as well as the processing fees for their services.
Central Banks
A country’s bank is known as the central bank. It is this bank which can fix the rates on the Foreign exchange of its currency. The appreciation or depreciation done in the currency value is to make it more impactful in economic implications. Their main goal is to stabilize the currency to keep the money and economy of the country competitive with the rest of the world.
Investment bankers or hedge funds
These funds are the most significant independent and non governed bodies in Forex trades. The use of investments to derive some profits. When international trades are done, they can set the conversion rates to get more money out of the deals.
Companies
Firms that are involved in regular import or export are known to get involved in Forex trades regularly. Many trades are made when a company buys their parts from somewhere and then sells the manufactured component somewhere else. The currency risk and currency swap deals are some of the necessary precautions they have to take.
Individual investors
There are very few who have invested heavily in Forex. Since it is a booming industry, many people are trying to get in to derive profits. They take things like interest rates, monetary policy expectations, and Inflation into account.
Conclusions
Forex is a booming industry, opens up options for everyone to derive profits. One can potentially get more by knowing who and why they trade. Investments are usually profit driven, Banks make speculative trades, and Central banks aim at growing the economy.
