What is Forex and How Does it Work?

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Forex Trade

Lately Forex become more popular due to the rise of trading stocks and cryptocurrency. Most of us must be familiar or have heard about forex, especially in this modern era, there are lots of impression in social media about this activity.  However do you understand what is forex and how does it work ?

What is Forex ?

Forex is foreign exhange or we are usually familiar with buying and selling foreign exchange. Forex is a foreign exhange transaction, it happen because of the demand for foreign currency needs. For example, when you go on vacation to America, you have to exchange your currency to dollar to buy necessities there and so on. 

In addition to the needs above, there ae some parties who trade forex for profit. A simple example is when you hear that the value of your currency will weaken, then you will buy dollars in large quantities to make profit. This activity has included as a forex trading. Besides that, there are several parties who trade using the services of a broker. Someone who trades forex must have high enough knowledge and exprerience in conducting market analysis in order to avoid losses.

A Brief History Of Forex

Prior to 1944, trading againts foreign currencies was not allowed. For example, Europeans who have Euros cannot buy Dollars while in America. Also when he is forced to pay for his needs, the euro will not be accepted as a means of buying and selling.

At that time gols was used as a reference in international trade. Finally, in 1970, a currency that was accepted as a means of buting/selling worldwide was established, namely the US Dollar. 

How Does it Work ?

Many people think that forex is gambling and rely on luck. Some of us think this activity is only based prediction or jus a game of setting. In fact, forex trading requires a lot of things to do, such as risk management, accurate market analysis, and the need to pay attention to news before trading. This is an important factor that determines the profit opportunities of a forex trader. Now we understand that forex is not a gamble but it’s a skill. 

1. Broker’s Role

Broker is an intermediary between investors or consumers in the capital market to make buying and selling. It would be nice for some high value commercial transactions such as gold, silver, other important documents, it would be safer and it is recommended to use broker services.

The broker’s function is to provide security services, transaction facilities such as charts, segregated accounts, and so on. Brokers also provide information in the form of price movements (charts) for traders to conduct market analysis.

Choosing a quality broker is an obligation as a trader. A regulated broker must have several characteristics such as fast deposits and withdrawals, low spread fees, and a good reputation software service facilities for 24 hours.

2. Currency Values Fluctuations

We should note that no person or institution can change the price movements of the forex market unless the party has a very large amount of money so that it can affect currency movements. However, it will also not change significantly in the end.

Basically forex transactions can run because of fluctuations in foreign currency values. Many factors cause fluctuations in a foreign currency, for example, economic turmoil in a country, geopolitical conditions, and so on. This leads to supply and demand. For example, the price of the US dollar will increase because everyone needs dollars to make a transactions. On the other hand, the dollar price will decrease if there are too many US dollars circulating in the world.

3. How to Trade ?

In principle, forex trading is to buy against one currency value and sell against another currency. The pairs are then traded simultaneously. Here is an example:

Example : Eur/Usd = 1.35000

The currency on the left is called the base currency (Euro). While the one on the right (US Dollar) is the opponent currency (quote). The example above shows that 1 Euro = 1.35000 Usd. Based on that, to get 1 Euro, you have to pay 1.35000 USD. And vice versa, you will get 1.35000 USD every time you sell 1 Euro.

Conclusion

Today, forex is an increasingly preferred way for some people to invest. However, before trading forex, there are several things that need to be considered such as broker regulations, mental readiness, and especially trading knowledge. Maybe for some people, forex is a difficult activity and only brings losses. Now you don’t have to worry anymore because thanks to technology evolution, now comes Fin888, an AI robot that makes it easy for us to trade. We don’t need to bother in analyzing a forex market, because with Fin888 all your trades will be done automatically using robots. Just deposit and enjoy 6-8% profit per month. Check more by clicking here.

Lately Forex become more popular due to the rise of trading stocks and cryptocurrency. Most of us must be familiar or have heard about forex, especially in this modern era, there are lots of impression in social media about this activity.  However do you understand what is forex and how does it work ?

What is Forex ?

Forex is foreign exhange or we are usually familiar with buying and selling foreign exchange. Forex is a foreign exhange transaction, it happen because of the demand for foreign currency needs. For example, when you go on vacation to America, you have to exchange your currency to dollar to buy necessities there and so on. 

In addition to the needs above, there ae some parties who trade forex for profit. A simple example is when you hear that the value of your currency will weaken, then you will buy dollars in large quantities to make profit. This activity has included as a forex trading. Besides that, there are several parties who trade using the services of a broker. Someone who trades forex must have high enough knowledge and exprerience in conducting market analysis in order to avoid losses.

A Brief History Of Forex

Prior to 1944, trading againts foreign currencies was not allowed. For example, Europeans who have Euros cannot buy Dollars while in America. Also when he is forced to pay for his needs, the euro will not be accepted as a means of buying and selling.

At that time gols was used as a reference in international trade. Finally, in 1970, a currency that was accepted as a means of buting/selling worldwide was established, namely the US Dollar. 

How Does it Work ?

Many people think that forex is gambling and rely on luck. Some of us think this activity is only based prediction or jus a game of setting. In fact, forex trading requires a lot of things to do, such as risk management, accurate market analysis, and the need to pay attention to news before trading. This is an important factor that determines the profit opportunities of a forex trader. Now we understand that forex is not a gamble but it’s a skill. 

1. Broker’s Role

Broker is an intermediary between investors or consumers in the capital market to make buying and selling. It would be nice for some high value commercial transactions such as gold, silver, other important documents, it would be safer and it is recommended to use broker services.

The broker’s function is to provide security services, transaction facilities such as charts, segregated accounts, and so on. Brokers also provide information in the form of price movements (charts) for traders to conduct market analysis.

Choosing a quality broker is an obligation as a trader. A regulated broker must have several characteristics such as fast deposits and withdrawals, low spread fees, and a good reputation software service facilities for 24 hours.

2. Currency Values Fluctuations

We should note that no person or institution can change the price movements of the forex market unless the party has a very large amount of money so that it can affect currency movements. However, it will also not change significantly in the end.

Basically forex transactions can run because of fluctuations in foreign currency values. Many factors cause fluctuations in a foreign currency, for example, economic turmoil in a country, geopolitical conditions, and so on. This leads to supply and demand. For example, the price of the US dollar will increase because everyone needs dollars to make a transactions. On the other hand, the dollar price will decrease if there are too many US dollars circulating in the world.

3. How to Trade ?

In principle, forex trading is to buy against one currency value and sell against another currency. The pairs are then traded simultaneously. Here is an example:

Example : Eur/Usd = 1.35000

The currency on the left is called the base currency (Euro). While the one on the right (US Dollar) is the opponent currency (quote). The example above shows that 1 Euro = 1.35000 Usd. Based on that, to get 1 Euro, you have to pay 1.35000 USD. And vice versa, you will get 1.35000 USD every time you sell 1 Euro.

Conclusion

Today, forex is an increasingly preferred way for some people to invest. However, before trading forex, there are several things that need to be considered such as broker regulations, mental readiness, and especially trading knowledge. Maybe for some people, forex is a difficult activity and only brings losses. Now you don’t have to worry anymore because thanks to technology evolution, now comes Fin888, an AI robot that makes it easy for us to trade. We don’t need to bother in analyzing a forex market, because with Fin888 all your trades will be done automatically using robots. Just deposit and enjoy 6-8% profit per month. Check more by clicking here.

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