Forex Market Explained
Forex is the common term for the foreign exchange market. The foreign exchange market is where the exchange of currencies happens. One country’s currency is traded with another’s. For a more understandable viewpoint, forex is buying foreign money with local money.
Forex Market Key Participants
The foreign exchange market is not owned by any specific organization or country. Anyone can participate in this market. While some participate to earn profit, others mainly want to exchange currencies for their own personal use. However, the foreign exchange market has different levels of accessibility.
Individual traders who wish to join the foreign exchange market may do so through forex brokers who act as mediators between the market and the traders. The brokers are the ones who participate in the higher levels of the foreign exchange market in representation of the traders. There are hundreds of forex brokers available online. But, it may be difficult to find reputable forex brokers, which would fit a trader’s needs, especially if the trader is relatively new to the forex market.
Forex traders earn profit by taking advantage of the fluctuations in the market. Traders would buy currency, which would give them proceeds when traded with another currency or when used in foreign transactions. However, being a forex trader would not always yield profit. Like other markets, losses, even great, are a possibility.
The foreign exchange market is global and is participated in by small or large corporations, investors, banks, retail traders, brokers, local or international businesses. Money can be considered as one of the most understandable languages between countries or peoples. And one country’s currency is not the same as another’s.
Hundreds of currencies can be equivalent to only ten or so convertible currency. This discrepancy is one of the main reasons why traders are enticed to join the foreign exchange market. A lot of people try to seek out fortune in this international market. Some would make lots of money while others may lose more than they can afford.
The foreign exchange market is a competitive market. Participating in forex game would entail a lot of luck and predictions since there are no official patterns for the fluctuations in the exchange rate.