How does this market differ from other markets?

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Hi Friends,

I am new to this market so,

Can anybody explain me How does this market differ from other markets?

 

FOREX( foreign exchange of currencies of foreign countries, FX) it's interbank currency market which was formed in 1971 with the cancellation of "gold standard". Now it's the biggest market with the daily turnover 1 trillion USD. When it was formed its turnover was 5 billion USD. The main mission of FOREX is the exchange of currencies. It's based on margin trade- getting benefit through trading. But it's not traditional market. It doesn't have concrete place as stock market or goods market. It functioning through terminals and phones.

FOREX works 24 hours a day except weekends which is very comfortable for trading in the evening. The main participants of FOREX are:

-marketmakers- they create this market (central banks, international banks, investment funds, financial companies).

- brokers and dealers – provide access to this market ( dealing companies or brokers)

- traders – transact (physical persons and entities).

Let's see the process and scheme of their trading in details:

1. Trader has his deposit(account) in broker company;

2. Gets access to quotes and terminal;

3. Gets right to use fast credit "leverage"( bank increases your deposit some times);

4. Enters into transactions on the exchange rates with the expectation of the moving of exchange rate;

5. Difference from the closing of the transaction is the client’s profit or loss.

How traders earn on FOREX? They make their profit by margin trade. Thanks to exchange rate it's possible to earn money, having only 100USD at your pocket and Metatrader4(terminal for trade) on your PC. So let's see the example. You have 100USD on your deposit in dealing(broker) company. Thanks to leverage 1:100 ( bank increases your deposit 100 times) you can transact to the amount of 10 000USD. You make a forecast that exchange rate of GBP(Great Britain pound) against USD(us dollar) will increase in some days. And decide to buy 3000GBP at rate 1.9800USD for 1GBP. You pay 5940USD for it. Next day the rate will increase to 1.9950USD for 1GBP. And you decide to sell your 3000GBP at this rate. You get 5985 USD for it. So you profit is 5985-5940=45$. To earn 45$ in 1 day having only 100$ at your pocket and sitting at home, drinking tea while trading, it’s great. Everybody wants to earn but doesn’t know how to do it. FOREX helps to do it.

 

Really helpful and appreciable.

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