A market is a place where traders buy and sell currencies. In general, the place where all transactions take place. Let's learn more about the forex market.
In general, the forex market, where the sale and purchase of currency is a program that must be downloaded and installed before starting to play.
There are a lot of forex platforms (market program) on which the game is played. The most famous of them: TeamWox, MetaTrader 4 and MetaTrader 5. All these platforms are different and good in their own way.
The currencies in the forex market are: rubles, euro, dollars, hryvnia and other currencies, in general, their number totals about 150 different currencies.
To make a big profit from the operation of buying and selling volutes, you need to buy it cheaper and sell more expensive. Or sell more expensive and buy cheaper. And if you bought the currency for expensive and sold for cheap, then you will not have any profit, only one loss. Therefore, before you make any transactions, you need to learn about the forex market as much as possible.
Some traders in the forex market use special programs that help them to trade in the forex market, extracting more profit from this and avoiding losses. Such a program is called an assistant. With its help, you can avoid risky transactions, and make only those transactions that will bring you profit. In general, an assistant is a script (program), which even traders sometimes write, thus creating a strategy for which your assistant acts.

Forex History

Forex (FOREX) - short for English. FOReign EXchange, which translates as "international currency exchange." The term Forex is used to refer to the mutual exchange of freely convertible currencies, and not the entire set of currency exchange transactions. Forex trading on targets can be trading, speculative, hedging, regulating (currency interventions of central banks).

In Runet, the term Forex usually refers exclusively to speculative trading through commercial banks or dealing centers, which is conducted with the use of leverage, that is, margin trading. This is described in more detail in the sections "Participants in the foreign exchange market" and "Forex as a means of making a profit".

Forex History

We owe the innovation to the Jamaican currency system, the principles of which were laid in March 1973 on the island of Jamaica with the participation of the 20 most developed states of the non-communist bloc. A little later, in 1975, French President Valéry Giscard d'Estaing and German Chancellor Helmut Schmidt (both former finance ministers) invited the heads of other leading Western countries to gather in a tight informal circle to communicate face to face. The first G8 summit was held in Rambouillet in 1975 with the participation of the USA, Germany, Great Britain, France, Italy and Japan (in 1976 Canada joined the work of the club, and in 1998 Russia). One of the main topics of discussion was the structural reform of the international monetary system.

The International Currency Market (FOREX) appeared on January 8, 1976, when a new agreement on the establishment of the international monetary system was adopted at the meeting of the ministers of the IMF member countries in Kingston, Jamaica, which was an amendment to the IMF statute. The system replaced the post-war Bretton Woods currency system. Since that moment, free floating rates have become the only way to exchange currencies.

In the new currency system, the principle of determining the purchasing power of money was finally abandoned on the basis of the value of their gold equivalent (the Gold Standard). The money of the countries, participants in the agreement, ceased to have official gold content. Exchange began to occur in the free market at free prices. It is this principle that gave rise to the term freely convertible currency (SLE).

The formation of a system of floating rates led to three significant results:

  • Importers and exporters and their banking structures were forced to become regular participants in the foreign exchange market, as the changes in exchange rates could affect the financial performance of their work, both from the positive and from the negative side.
  • Central banks have the opportunity to influence the exchange rates of national currencies, thereby affecting the economic situation in the country.
  • The rates of the most liquid national currencies are formed on the basis of the market's search for a point of equilibrium between current demand and the available supply, and each change in supply and demand in the market causes the exchange rate to move in one direction or another.

  • Currently, the volume of daily trading on the FOREX market is, according to various estimates, from 2 to 4 trillion dollars. There is no exact data, as there is no requirement for mandatory registration and publication of all transactions in this market. Part of this volume is provided by margin trading. Regardless of the nature and purpose of the transactions, such a large daily turnover is a guarantee of high liquidity of this market.

    Participants in the foreign exchange market

    Forex is the international interbank market. Operations are conducted through a system of institutions: central banks, commercial banks, investment banks, brokers and dealers, pension funds, insurance companies, transnational corporations, etc. The volume of one contract with real currency delivery on the second working day (spot market) is usually about 5 million US dollars or their equivalent. The cost of one conversion payment is from 60 to 300 dollars. In addition, you will have to pay up to $ 6,000 per month for the interbank information trading terminal. Because of these conditions, on Forex do not carry out the conversion of small amounts. To do this, it is cheaper to apply to financial intermediaries (a bank or a currency broker) who will convert for a certain percentage of the transaction amount. With a large number of clients and multidirectional applications, intermediaries do not always need to make a real conversion through Forex. But they always get their commissions from customers. It is due to the fact that not all client requests enter the Forex market, intermediaries can offer customers commissions that are substantially lower than the cost of direct Forex transactions. At the same time, if you remove intermediaries, the cost of converting to the end customer will inevitably increase!

    Current currency quotes are used for a large number of transactions, which do not necessarily have a direct exit to Forex. An example is the change in the exchange rate of the national currency by the state bank, which is forced to maintain the exchange rate proportions between foreign currencies in accordance with their proportions in the Forex, even if the real demand / supply inside the country does not correspond to the trends in Forex. For example, if there is a surplus euro offer on the domestic market, but the price of euro against the dollar on the Forex market increases, the central bank will also have to raise the price, rather than reduce the excess supply under pressure.

    Another vivid example is the marginal speculative currency trading, which is focused on fixing the current Forex quotes, but under its conditions passes without a real delivery. Almost all intermediaries in the foreign exchange market offer not only direct conversion services for customers, but also speculative trading with a leverage. In most cases, commission for such operations is even lower than for direct conversion, because due to the massive nature and short duration of transactions, the need to conclude real contracts for supply arises even less. Very often commission fees take the form of a spread - a fixed difference between the purchase price of a currency and the sale price at the same time. In most cases, a chain of forex brokers is formed between forex and the speculator, each of which takes its commission.

    Marginal operations can lead (but not necessarily lead) to the emergence of real additional demand or supply in the foreign exchange market, especially in the short term. But they do not form a general trend of the movement of exchange rates.

    Forex as a means of making a profit

    In RuNet, the term Forex is usually not called a system of currency exchange in general, but exclusively marginal speculative trading through commercial banks or dealing centers. At the same time, advertising with calls to "make money on Forex" usually does not indicate what it is about. People are usually not warned that this activity is not "earnings", that this is one of the types of business with its starting capital and unavoidable risks. Moreover, a business with a higher level of profitability is always more risky. In advertising, it is not reported that the use of leverage leads not only to an increase in the speed of capital increase, but also to a multiple increase in the risk of losses. It is offered to just see everything with your own eyes and try it on training accounts with virtual money. Such accounts usually "live" 2-4 weeks. During this time, it is not always possible to observe all possible situations. Most beginners at the same time see only what they themselves want to see - the ease and speed of increasing funds. Failures are quickly forgotten: after all, I'm an inexperienced novice, and virtual money - "I do not lose a cow." Successes inspire and remember well: even a newcomer managed to "get rich" so quickly, everything is so simple that you can start earning a profit tomorrow.

    At the same time, we must not forget that any business always contains the opportunity to profit by accident. To profit was not from time to time, but regularly and regularly, it requires an understanding of how the specifics of a particular type of business, and economic laws in general. Only if these laws and restrictions are observed, the currency trading in terms of risk and return is comparable to any other speculative trade, including in the stock or commodity markets.

    The statements about "investments in the Forex market" raise doubts. Forex is not a currency exchange or other official trading platform with clear rules and time of work. Tradable currencies (unlike shares, bills of exchange, bonds) do not have an independent yield, which would not be related to exchange rate fluctuations in the currency market itself. However, there is a possibility of receiving income from a positive swap. But the guaranteed yield at the level of 1-3 points per day (about 10-30 dollars under the contract for the amount of 100'000) is not comparable with the risk of unprofitable currency movement at 100-200 points per day (about 1000-2000 dollars with a contract for the amount of 100 ' 000).