Forex Market, 7 Frequently Asked Questions

Business Society

Where is the speaker of the foreign exchange market?

The Forex market is not centralized in any bag, as in stock and futures markets. The foreign exchange market is considered an over-the-counter (OTC) of the market or ‘Interbank’ market given that the operations are performed by means of an interbank electronic network.

When the Forex market their doors open to operate?

An open market 24 hours, whose operation begins every day at Sydney. Then, you move around the world to start your day of activity in financial centres. First to Tokyo, then London and new york. Unlike other financial markets, Forex investments can operate in response to the currency fluctuations. These fluctuations are caused by economic, social and political conditions at the time wherever they want, either during the day or at night.

What are the most frequently exchanged currencies in the foreign exchange markets?

Most traded currencies or more “liquid” is more stable countries Governments, banks power, respected and low inflation. Today, more than 85% of daily transactions involve the purchase and sale of major currencies such as the dollar, the Japanese Yen, Euro, British pound, franc Switzerland, Canadian dollar and Australian dollar.

Need lots of money to operate on the Forex market?

The minimum deposit required by some brokers is only $250 for a characteristics of Forex. It is also important to note that a Forex trader can make operations with a range of up to 100: 1 leverage. This means that investors can conduct operations up to $25,000 with an initial margin deposit only $ 250.
What is margin?
The margin is essentially the guarantee of a position. If the market is unfavorable to the position of customer movements, seeks additional funding through a “margincall” (which is the margin coverage) if the funds available are not sufficient, the open positions of the client will be immediately closed.

This means a ‘long’ or ‘short position?

A long position is that where an operator buy badges at a price determined and planned to sell them more forward to a higher price. In this case, the investor benefits from a decrease in market price. A short position is one in which the operator sells currency until it depreciate. In this case, the investor will benefit from a decrease in the market price. However, it is important to note that each position on the Forex market requires that an investor has a long in one currency and short position in another.

What factors influence the pricing of badges?

Currency (exchange rate) prices are influenced by a variety of economic and political conditions, mainly interest rates, inflation and political stability. In addition, Governments often participate in the foreign exchange market to influence the price of their currency. Through the sale of their own currencies, they can lower the price of them, and through the purchase of foreign currency, they can increase the price of their currencies. It is very important to remember that the size and volume of the Fx market makes it impossible for an entity to manipulate the market for a period of time.

How can I manage risk when I operate with foreign currency?

The tools to control the risk in buying and selling of currencies most common are limit orders and “stop-loss”. A limit order imposes restrictions with respect to the maximum to pay the price or the minimum price to receive. Order “stop loss” allows that a particular transaction is automatically liquidated at a price determined in order to limit the potential for losses if the market perform movements opposed to the position of the investor. The liquidity of the Forex market guarantees little arrested and “stop loss”, they are easily implemented.