Workings of Forex market

 Welcome to daily blogs with ValidUS. We are delighted to see you back again on our blogs and hope you enjoy the knowledgable content we provide. Join ValidUS and be a part of the best trading education site. Now let's dive into another chapter of trading learning. Today we'll study how the Forex market works,when you're trading, what you're actually trading and what makes currency pairs move.

First of all, for an exchange market, it's the biggest market in the world bar. It trades trillions of dollars a day round the clock, so it pleases both traders, i.e. who are trading small and larger sizes because it's comparatively simple to get your trades fulfilled. The expense of doing business is much lower with currency markets compared to other markets. No currency moves in insulation, so we have the idea of currency pairs.  Here's the list of various currencies -  Australian dollar, Canadian dollar, Swiss Franc, Czech, and so on. So there are potentially hundreds of permutations. We could trade, for example, the PLN Polish Lottie, if you want you, could take a look at the Polish Lottie against a Japanese yen Polish Lottie against the Mexican pesos. What most people happen to do in the beginning, at least, is stick to the major markets, i.e. the major currency pairs, because there usually's plenty going on in those markets. If you're trading 25 000 units or a lesser amount, you can trade these with zero Spread. So here, when we're viewing currencies and currency pairs, it's about relative value. Is one currency more powerful or weaker than another currency?  To get an inkling of this, let's take a look at how one currency pair has moved over recent months.

All currency pairs show the relative value of one currency versus another.  For example, pound US dollar, at the beginning of January 2017, one pound would get you about 1 dollar and 22 cents. In the initial days of September, the pound had risen in value, and one pound would buy you one dollar and almost 32 cents. When we're looking at forex pairs for exchange trading, we're looking at the value of one currency versus another.

 It can be a little confusing at the beginning for some people when they click and buy dollar-yen. Questions like What am I buying? Am I saying the dollar is going to go up? Am I saying the yen's going to go up?  might arise in your head. We understand why this is confusing to some of you'll, but it's really easy.

When we're trading, what direction are we actually trading in when it comes to directional trading?. It's really easy like we mentioned earlier. It can be a little confusing for people initially, but the way to remember is if you buy a pound US dollar, it's the first quoted currency in the currency pair that you're buying or selling. So if a person purchases a pound US dollar, we're speculating that the pound is going to go up means the graph chart is going to go up and correspondingly, the US dollar is going to fall, so the pound's value is going to increase against the US dollar. So, for example, if the person bought a pound US dollar at the beginning of the year and we're still holding the position, the person be sitting on a reasonable profit. If the person thought that the pound had gone up and the market would fall, how does the person profit from this? The way to do it? The person would click on sell and sell the pound against the US dollar, so the person is speculating the value of the pound is going to drop, and this chart is going to turn lower. That's a rule of thumb when you're purchasing or selling, it's the first quoted currency that you're buying or selling against the other one. So if we sold the dollar against the Japanese yen, we're speculating that the dollar-yen is going to fall, so the dollar is going to fall, and the yen is correspondingly going to rise when it comes to trading hours. It starts off Sunday night, UK time, when the Asian markets open for business, and it trades all the way around the clock. Till Friday evening, when new york finishes off the weekend, then on Sunday, the whole thing starts again, but you don't need to be intimidated or worried by this 24-hour market. 

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