Forex Trade Forecast
“Forex ” stands for Foreign Exchange; it’s also known as FX. In a Forex trade, you buy one currency while simultaneously selling another.
Currencies trade decentralized trading platform in pairs, like the Euro-US Dollar (EUR/USD) or US Dollar / Japanese Yen (USD/JPY).
Forex trading is used to speculate on the relative strength of one currency against another. The foreign exchange market is an over-the-counter market, which means that it is a decentralized market with no central exchange.
Who trades currencies, and why?
Daily turnover in the world’s currencies comes from two sources:
Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.
Speculation for profit (95%).
Most traders focus on the biggest, most liquid currency pairs, known as “The Majors”. These include US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. In fact, more than 85% of daily Forex trading happens in the major currency pairs.
The world’s most traded market, open 24 hours a day
With average daily turnover of US$3.2 trillion, Forex is the most traded market in the world.
To put it very simply, currency trading is a way to profit from the rise and fall in the values of the different currencies of the world. One currency is constantly changing in value in comparison to another. So you can make money by exchanging a falling currency for a rising one.
In practice, you will work with a pair of currencies, which might be the US dollar and the euro, known as the EUR/USD pair. You will watch how the price of this pair changes according to which of the two currencies is perceived to be strengthening and which one is weakening. Then you buy or sell the pair to profit from the change.