Forex Market – Information For Beginners

 

The foreign currency market is where the currencies of different countries get traded and the unique feature of the market is that it is a decentralized market. This market was created to facilitate the cash flow from international trade. Today it is the largest financial market in the world where the daily volume of trade is more than trillion dollars.

Unlike the stock market, the forex market is free and there is no institution which acts as the intermediary between parties involved. Every transaction gets closed between partied with the help of a private contract. Even the trading of digital currencies is also quite similar to the forex market. In the cryptocurrency market, the digital currency gets traded with the help of trading software like the bitcoin code. Majorly the bitcoin currency gets traded using the software. Even this market is decentralized and does not come under any control. It is becoming one of the most sought after and popular market for people to trade and earn money, Go through this review here to learn everything about the trading of cryptocurrencies.

The forex market works throughout day and night. It opens on Sunday afternoon and closes by Friday. This market has a wide variety of participants ranging from private individuals to central banks and a huge number of currencies gets traded here.

Functions of the forex market

  • It helps in setting the currencies prices with respect to another currency. It defines the total number of a particular currency’s unit to be exchanged for 1 unit of different currency.
  • It favors the fund exchange between two different countries. Some countries would be in need of liquidity while another country would have excess liquidity.
  • The forex market allows realizing the risk coverage on currency, whenever the investments are done in a different currency.
  • It helps in financing the international trade where these transactions represent the major part of the forex

Understanding the symbols in the currency market                                       

The currencies in the forex market are identified by the three letter code. The currency pairs are denoted by the six letter code. For instance, the dollar as the quoted currency and the euro as base currency:

  • First three letters will denote the base currency (EUR)
  • The last three letters of the pair will refer to that currency which is being quoted (USD)
  • The price of the currency pair defines the total number of quoted currency’s unit per base currency unit.

 

 

 

 

 

 

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