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What is Forex?
Forex (Foreign Exchange for its acronym in English) is translated as “currency exchange” and it is nothing more than the biggest and more fluent currency market in the whole world, achieving a daily trading range of approximately $4 billion dollars. In other to have a clear idea of how big the market is, we have as a perfect example the New York stock exchange, which is considered the biggest regarding stock market worldwide, this one needs about 30 days to move the amount of money Forex moves in one day. This is simply amazing, but how does Forex work?
Forex does not have a physical place to make its operations, however, it is in working for 24 hours a day during 5 days of the week and the best part is that it does not have restrictions regarding time, this is thanks to a series of virtual financial procedures that are made from any part of the world with the objective that people can make currency exchange at any hour. This falls on the fact that there is a wide diversity of currencies which is circulating in the countries of the world and that each one has a different value.
When mention is made about what the purchasing and selling of currencies is, negotiation is made from the fact that these are two different currencies, and when Forex is used, we find that these will always be in pairs. Being the most common the EUR/USD pair, POUND/USD pair and the USD/YEN pair, having that the price of change of each one is different. This exchange price will depend on a fundamental fact which is offer and demand, this means that the more users are acquiring a certain type of currency, the highest the price of this one gets and vice versa. Inevitably, if big amounts of users start selling a specific type of currency, the value of this one will decrease and it is in this way that the prices of the different currencies are bound to variations even on a daily basis.
The fundamental key to have success in this market, is learning to analyze and predict the behavior of the currencies both long and short term in order to know when its values will increase or decrease and then to proceed to buy and sell in the best moment, in this way instead of losing, we can get profits achieving an increment in our capital. This is how the currency market works.
It is essential to know that this is not about chance or less to obtain success by operating in currency market such as Forex. It requires learning how to make market analysis through different methods and tools, and in this way, little by little, learn to be an excellent trader that manages this market in a professional way.