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FOREX EXCHANGE

FOREX MARKET





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FOREX EXCHANGE
1. Introduction

The market currencies, which is often called "Forex" or "FX" is the largest, most liquid, most
transparent financial market in the world. Daily average turnover now exceeds 2 trillion. All American
capital markets together do not exceed 3% of the volume of trade in the FX tritu.Za Unlike other
markets, where most can benefit when prices rise, the FX market profits are made accurately predict
changes in the relative values of any two currencies. Cyclic changes affecting other markets are
insignificant to FX market. Constant fluctuations in currency offers continuous opportunity for profit.
The basic concept term currency market means selling one currency while simultaneously buying
another .Since being traded currency pairs that you have benefited from exchange rate movements,
you should buy currency that you think will strengthen and to sell another . For example, if you
believe that the Euro (EUR) to strengthen against the dollar (USD), you will buy the EUR / USD; or in
the other words buying euros and selling dollars. If you believe that the US that depreciated against
the US dollar, then you sell the EUR / USD; or you sell the EUR and buy USD. No need to wait
growing market to you profited. At any time, one currency will strengthen against the other. The FX
market is constantly creating opportunities for investment.
Who trades in the Forex market?
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Many people use forex trading for a living Forex traders can be classified into two groups, the
hedger and speculators.
Hedgers: governments, companies (importers and exporters) and some investors who are exposed to
foreign exchange variations. The movements of the local currency relative to foreign currency
companies with which they do business (for the exchange of goods and services) or by investing, will
affect their profitability. This is the essence of all foreign exchange trading; however, it accounts for
about 5% of the actual market.
Speculators: This group, which includes banks, funds, corporations and individuals creates artificial
pressure on the exchange rate with the aim of profiting from variation or price movements.
Currency pairs

Each currency is recognized by code of three letters. For example, the US, the euro and refers to the
European currency, the USD is the US dollar. Leading currencies (often referred to as the Meiji) are
USD, JPY (Japanese Yen), GBP (British Pound Sterling or), CHF (Swiss franc), AUD (Australian dollar)
and CAD (Canadian dollar) .Currency are traded in pairs and both are displayed. In this situation the
optimal strategy is to use best currency pairs to trade. He's always shown three-letter currency
code, slash, and other three-letter currency code. First currency, which is displayed referring to the
"basic", "leading" or "primary currency" other currency refers to the "secondary currency" .For
example when you look at the EUR / USD, then the leading US currency, and the USD is the
secondary currency. "Currency pair" is then followed by the number with five digits of a decimal
point after the first digit, for example 1.2660.Broj represents the ratio of one currency in terms of
another, and can be read as "the amount of the secondary currency needed to drive major
currencies." In the example we gave, EUR / USD 1.2660 for 1 Euro will need $ 1 and 26.6 cents.

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Source:http://dailyforeignexchange.com/wp-content/uploads/2014/05/forex-img11.jpg
2. Forex exchange

Forex exchange or Forex is the name created as an abbreviation of english title - Foreign Exchange
Market, and indicates the international term for the currency market that is also known as best forex
trading system in the world, where currency pairs and other investment instruments are being
traded. Forex stock market works in the performance of everyday trade of total world goods as
activities, but equally in parallel and exchanging currency between countries that trade. As the
world's largest market works through stock centers on five continents, trade takes place practically
24 hours a day and the instrument that is mainly traded is money.
The main characteristic of money that is also the subject of trade is its exchange rate. The exchange
rate is simply the attitude of one currency in terms of another. For example, the relationship
between the EUR / USD shows how many Euros is needed to purchase one dollar, or how much USA
dollars we need to have to purchase one Euro.
2.1 The work of Forex Exchange

There are eight currencies traded the most (USD, EUR, JPY, GBP, CHF, CAD, AUD and NZD) and they
are called the major currencies. All other currencies are referred to as minor or small currencies. In
fact, the most commonly traded with is what is called the "big five" (USD, EUR, JPY, GBP and CHF).
This is because they are usually the most liquid currencies, although it cant be argued that the so-
called "small" currencies cant also be liquid. The basic currency is the first currency in any currency
pair. It shows how much the basic currency is worth in relation to another currency. Functional
currency is the second currency in any currency pair. Its often called pips currency and all unrealized
gain or loss is expressed in this currency.
On the foreign exchange market (Forex Marketplace) we can buy or sell currencies. Placing orders on
the foreign exchange market is simple: the process is very similar to that in other markets (such as
shareholder's stock exchange). The purpose of forex trading, and the core function of Forex
Marketplace is exchange of one currency for another in the expectation that the price will change in
the way that the currency we bought will increase the value compared to the one we sold. Forex
trading is essentially the simultaneous buying of one currency and selling of another. Currencies are
traded through a broker or dealer, where the main part of the whole process is how forex brokers
make money, and is also important to highlight that currencies and are traded in pairs, for example,
the Euro and the USA dollar (EUR / USD) or the British pound and the Japanese Yen (GBP / JPY).
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Source: http://dailyforeignexchange.com/wp-content/uploads/2014/05/forex-img13.jpg
3. Histroy of Forex exchange

The international currency market - Forex was founded as an organization in the late 19th century.
The first formal agreement was signed in 1867 in Paris.
1. Fixed standard until 1944.
2. Currencies were linked to gold - the 'gold standard' '. British Pound (GBP) has been accepted
as the main reserve currency.
3. Regulated standard from 1944 to 1971. In the year of 1944 a new dollar standard - valute
related to the USD $ was introduced, and USD $ for gold. USD $ becomes the main reserve
currency. In 1944, the MMF was founded. The main role of the institution of MMF was to
prevent the repetition of adverse events between the two world wars, through a sort of mix
of discipline and flexibility. Discipline was provided on the foundations of monetary theory of
balance of payments adjustment. The course was not fixed, but its devaluation or revaluation
should be approved by the MMF and only in certain limits.
4. In the year of 1971 a 'floating exchange rate' was introduced (the ratio of the purchasing
power of currencies)
5. In the year of 1976 a 'floating course' was introduced on the initiative of MMF and USA
(supply-demand)
6. In the year of 1981 the first electronic trading system was introduced (Reuters company)
7. In the year of 1998 Internet banking was introduced (all transactions are carried out
electronically)
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4. Basic currency

Money management forex has as its main goal in a proper and efficient way to manage your money,
in order to achieve satisfaction of all participants on the exchange. World international organization
for standardization - ISO (International Organization for Standardization) has adopted the ISO 4217
which defines the abbreviations or codes for all the world's currencies. For each currency there are
two codes, one mnemonic, memorable and in widespread use, of three letters and one numeric
three numeric characters. Currency are always marked with three letters, where the first two
symbols of the state, and the last symbol of the currency. By purchasing a particular currency,
purchased part of the economy whose currency is concerned.
ZEMLJA SIMBOL VALUTA UDIO
USA USD DOLLAR 86.3 %
EU EUR EURO 37 %
JAPAN JPY YEN 20.30 %
GREAT BRITAIN GBP POUND 16.90 %
SWITZERLAND CHF SWISS FRANC 6.80 %
AUSTRALIA CAD AUS. DOLLAR 6.70 %
CANADA AUD CAN. DOLLAR 4.20 %
NEW ZEALAND NZD DOLLAR 1.30 %

As shown in the table, the currency that is most actively traded stocks, i.e. currency which has the
largest share of all transactions in the foreign exchange market is the dollar, with over 86% share.
Euro holds second place with 37%, and then, following Yen (20.30%), pound sterling, with almost
17%, the Swiss franc (6.80%) and Australian dollar (6.70%). The share of other currencies in trade in
this market is lower than 5%.

Based on these data it can be concluded that the Forex trading mainly leading world currencies, and
that the value of other currencies adjusts based on supply and demand in the national currency
against the major currencies . This entire process can be done over the internet.

5. Headquarters and work hours of Forex

Unlike other exchanges, Forex has no physical location in a city. It exists in an electronic network,
consisting of large financial institution. Do 1990, only tycoons can trade in Forex. To begin investing
in forex, it took over 10 million USD. Today it is quite different. The emergence and development of
the Internet has enabled access to forex trade with all the small investors, that is - the common
people. Today it is possible to start trading in Forex with just $ 1. All you need is a computer, good
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internet connection, links and relevant information regarding how to trade. Forex can be traded 24
hours a day, but not every day. Market opens (after the Central European Time) in 23 hours on
Sunday , closing on Friday at 23 hours. During the day there are several seasons that do not coincide
with the hours, the world's largest stock exchange. In this connection the following list of the season:
London, begins at 9:00 am at the Central European Time
New York, 14:00 PM
Sydney, 23:00 hours
Tokyo, 2:00 hours
The most important trade takes place during the London and New York season and Tadas occur most
important changes in currency values.
Market status Time zone CET
Sidney
Sidney
Opening of exchange
Closing of exchange
Midnight
9 AM
Tokio
Tokio
Opening of exchange
Closing of exchange
2 AM
11 AM
London
London
Opening of exchange
Closing of exchange
9 AM
6 PM
New York
New York
Opening of exchange
Closing of exchange
2 PM
11 PM

5. Conclusion

Millions of traders of various fields, initial capital, age, and leisure, trade and make profit on Forex,
Futures, was CFDs (Contracts for Difference) and other financial instruments, sending orders via the
Internet. Daily turnover on Forex exceeds 4,000 billion, making it the largest market in the world.
Forex is a market that is open 24 hours a day from Sunday 22:00 GMT until 22:00 GMT Friday. With
options trading at any time of day or night, traders have the option of choosing their own trading
schedule. However, for large profits in Forex, you need to have excellent knowledge of economics,
daily and closely follow the financial statements, advice and recommendations of others, even if
profit is not guaranteed, as determined by operational risk still exists. The great advantage of Forex is
that there are mobile applications that facilitate trade, and at any time anywhere can trade and see
your account balance.