Foreign Exchange

Foreign Exchange



The Foreign Exchange market, which is usually contracted into the term to “Forex” or “FX markets” is the largest, most liquid, most transparent financial market in the world. Its daily average income exceeds 2 trillion USD, while the entirety of U.S. equity markets do not reach 3% of the total volume traded on the FX market. Unlike other financial markets, where generally one can only earn in rising movements, in the FX market whenever one enters into a position he is long (bought) one currency and short (sold) another currency simultaneously therefore, to the opposite of other financial markets, in the FX markets there are non-stop earning opportunities.

Basic Concepts.
The expression Foreign Exchange indicates the simultaneous transferring of one currency into another. Since currencies are traded in pairs, to profit from an exchange rate movement one has to buy the currency that it’s expected to raise and sell the other. For example, if Euro (EUR) is expected to increase against the dollar (USD) you would buy the EUR/USD; or in other words buy the EUR and sell the USD. Otherwise, if in your opinion the EUR is going to decrease against the USD then you would sell the EUR/USD; or sell the EUR and buy the USD. As can be seen there is no need to wait for a bullish market to profit, for at any given moment, one currency will be strengthening against another. The FX market is therefore constantly producing opportunities to invest.