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What is Forex?
Currency trading (FOREX)
Forex is short term for Foreign Exchange or Forex. Forex is a global trading system which includes banks, institutional investors, funds and stock speculators. The daily turnover in the foreign exchange market exceeds the amount of 4 trillion US dollars and continuously continues to increase.
Generally FOREX trading is the simultaneous buying of one currency and selling another. Transactions can be made electronically (by computer) or cash market - for example, changing the currency exchange bureau. In both situations, we have a currency or FOREX transaction.
Most of the transactions are made in the main currencies: United States Dollar, Euro, Great Britain Pound, Japanese Yen, Swiss Franc, Canadian Dollar and Australian Dollar.
Generally forex trading is the simultaneous buying of one currency and selling another. Transactions can be made electronically (by computer) or cash market - for example, changing the currency exchange bureau. In both situations, we have a currency or forex transaction.
The bulk of transactions take place in one of the main currencies: US dollar, Euro, British Pound, Japanese Yen, Swiss Franc, Canadian Dollar and Australian Dollar.
Unlike other financial markets (such as the stock market), the currency is not positioned at a designated place.Forex market operates 24 hours a day through a network of computer terminals connecting banks, corporations, brokers and individual investors who trade with different sized amounts ranging from millions of dollars to deal a few tens or hundreds of dollars in ordinary investors.
This ensures the formation of so-called "market liquidity" or the ability to buy or sell currencies indefinitely without any restrictions. Trading begins each day in New Zealand followed by Sydney, in Tokyo, London and New York to the coast of California.The development of computer and Internet technology has made the forex market accessible to small players can buy and sell currencies from their offices or home.
In each foreign exchange transaction always has two prices: For example, take the price of EURUSD, which would look as follows: 1.4000 / 1.4002. Probably soon will make you impression that prices are two. This is because exchange rates include the price "Buy" and "Sell":
- Buy (Bid): The price at which the dealer to buy and investors Sell
- Sale (Ask): The price at which the dealer sale and investors Buy
The difference between the buy and sell price is called spread (Spread). The spread is the cost paid by the investor for the transaction. Varchev Finance offers the tightest borders between courses "buy" and "sell", thereby reducing the cost of each transaction.
Currency pairs are quoted to four decimal places, eg USD / CHF 1.3000 / 1.3003, the latter sign is called "pip". In most currencies a pip is 0.0001 from the current rate. The pairs in which the second position is the Japanese yen (JPY), where a pip is equal to 0.01.
Investors base their decisions on trade of technical or fundamental analysis. Technical analysis uses charts, trend lines, levels of support and resistance, mathematical models and other means.Investors using fundamental approach base their decisions on economic analysis. More information on technical and fundamental analysis can be found in the Training section.
Gaining profit from the Forex is easy! You can trade in the national currencies of different countries and to gain from the difference in exchange rates. The foreign exchange market (Forex or FX) is the largest financial market in the world with a daily turnover of over 4 trillion dollars.
To get the profit is necessary to buy some currency, wait for its growth, and then to complete the transaction. Resulting in a transaction a positive difference - this is the profit of the trader.
Buy 0.10 lot of EUR / USD pair is buying € 10,000 at the current exchange rate 1.3660 / 62. To find this position you need $ 100 own funds. When price changes by 1 cent (100 pips) or rate of the pair 1.3762 / 64, results for closing the position of exchange difference will be $ .0100 x 10,000 = $ 100 profit.
This is the way to make money on the FOREX market. In practice, this operation can be accomplished by a few clicks of your home computer.
Margin trading allows opening of position by the deposit of a small percentage of the transaction amount in your account. Varchev Finance allows opening of positions by a deposit of 0.2% of the transaction value.
What means “Long” and “Short positions?
In trading slang, a long position is one in which the investor buys gold at a fixed price and aims to sell at a higher price. In this case, the investor benefits from a rising market. Short position is one in which the trader sells gold in anticipation of its devaluation and subsequent purchase at a lower price. In this scenario, the trader benefits from a declining market.
How to control the risk?
The most common tools for risk control in trading precious metals limit (Limit) and stop (Stop loss) orders. Limit order sets the maximum purchase price or minimum price for sell.Stop loss order ensures that a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. Liquidity of the market ensures that limit and stop orders will be easy.