Forex BasicsSo, this lesson is designed to help beginners on the market Forex. Before you start some business, you need to learn the basics of Forex.If you are not a beginner in Forex, then this article is not for you. This course is for beginners. Welcome you, the novice Forex trader! We will help you sort out the vast market of Forex, finance, cross-currency exchange rates, investments, quotes. We promise that very soon you will understand this is not worse than an experienced currency trader. And when are comfortable - will be able to become a trader or investor in any company working on the international currency market Forex. So, proceed ...When there was a market for Forex? A little history ...World Money Markets Forex (FOReign EXchange) was formed, when international trade shifted from fixed exchange rates to floating ones. This is a collection agents, the foreign exchange market transactions on the exchange of specified sums of currency of one country's currency for another at an agreed rate for a specific date. In an exchange rate of one currency relative to another is defined very simply: by supply and demand - exchange to which both parties agree. Since then, the Forex has become the most dynamic and liquid market and the only market in the world, working around the clock.Volume of transactions of the global currency market is constantly growing. This is associated with the development of international trade and abolition of currency restrictions in many countries. Impressive is not only on its own volume of transactions, but also the rate at which marked the development of the market: in 1977 the daily turnover stood at U.S. $ 5 billion over ten years it grew to 600 billion and has reached one trillion dollars in 1992. About 80% of all transactions are speculative, with a view to profit from the game on the difference in exchange rates.It should also be noted that because of the highest rates of development of information technology in the last two decades the market itself changed beyond recognition.Features of the Forex MarketFirst and foremost, a feature which explains the increased interest in him, the Forex market is that it does not have any particular trading venue. Forex - a network of interconnected using telecommunications currency dealers, spread over all the world's leading financial centers, and working around the clock. Currency trading is by telephone or via computer terminals. In trading the main currencies are the U.S. dollar, euro, Japanese yen, Swiss franc and British pound.The second feature of the Forex market is the ability to buy / sell foreign currencies in the absence of the total amount required for operations. For the transaction to the client need to make only the initial margin, but he has the ability to enter into the transaction volume of 50-100 times higher than the amount of contributions received. Bank or other credit institution, where the client introduces a guaranteed margin, in turn, provides him with the missing funds or so-called "leverage." Below we examine these terms in more detail.Margin trading. Leverage. Bail.Now, let's settle down a bit in terms. Speculative trading in the Forex market made on the principles of margin trading (margin trading), which was first introduced in 1986. Margin trading is used to attract market investors with amounts less than $ 1 million (standard lot for trading on Forex).The essence of margin trading is that for the transaction is not necessary to have the entire amount of the contract price, you just pay a security deposit (margin), which is typically 1-10% (usually 2-5%) of the total contract. In other words, for a transaction to buy or sell currencies your financial partner lends you the missing sum or, as Forex traders, provides "leverage" or "arm» (leverage).Size of the "leverage" (margin) on the Forex market is determined by agreement between the customer and the bank or brokerage firm, which provides him entry, and it is usually 1:33, 1:50 or 1:100. For example, if the size of "shoulder" 1:100, and then making a pledge in 1000 dollars, the customer may conduct transactions in an amount equivalent to 100 thousand dollars.Using such a high "leverage" in conjunction with the strong variability of quotations of currencies makes the Forex market is profitable and at the same time risky.For a better understanding of the foregoing, we give a simple example. Suppose you want to buy a $ 100 000 per euro, then a 1% margin (leverage 1:100). You need to make only $ 1000 bail. All profits or losses from the purchase of 100,000 dollars for euros, which arose from changes in foreign exchange, recorded entirely at your expense. The bank charges no commission on your transaction. Benefit Bank is to raise your funds.The next, very important advantage of the Forex market is the ability to profit from any direction of price changes. As for selling the euro or the yen does not necessarily have to run it the euro or yen.
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