The well-known international foreign exchange market Forex has existed for over 45 years and is currently one of the most interesting and unusual ways to earn additional income. Round-the-clock work (Monday to Friday), online distance trading, minimum deposit for opening an account are the main advantages of this financial market. The volume of transactions made on Forex is several trillion US dollars daily!
Many people believe that only economists and financiers work in this area. However, it is not. Quite a large number of successful traders do not have a higher education in economics. The fact is that the most important thing in Forex is not a diploma, but a person's desire to constantly improve himself in this area and learn new things. For successful work, any novice trader must first acquire basic knowledge, and then apply it in practice using a training virtual Demo account. In almost every city in the world you can find Forex dealing centers, thanks to which anyone can get free training on currency trading. Knowledge and ability to correctly buy and sell currencies on the market is the main guarantee of the success of any trader. A demo account can be opened not only in dealing centers, but also from home, using a special computer program for this. It can be downloaded from the Internet. For the successful operation of the program, you must have constant access to the global network. How exactly - described in
The history of the Forex market began in the 70s of the last century. At that time, countries could not change the rates of their currencies against the currencies of other countries freely. The rates were strictly fixed and pegged to the US dollar. In turn, 30 “greens” were valued at 1 ounce of gold. All this was part of the Bretton Woods system, the main task of which was to help most of the countries of the world survive the aftermath of World War II. In 1971, she fulfilled her mission and was replaced by the free exchange rate system. It was then that the international currency market Forex appeared. The exchange rate of the currency of one country in relation to the exchange rate of another was now determined based on supply and demand from buyers and sellers on the currency exchange.
The number of participants trading on the Forex market is huge:
- Private commercial banks
- Central banks of states
- Brokerage houses
- Insurance, investment, hedge funds
- Export and import companies
- Private persons
Private commercial banks
The world's largest commercial banks have huge financial resources that allow them to significantly influence exchange rates. The volume of daily transactions carried out by these market participants can reach several hundred billion US dollars! Forex is one of the main sources of their income. Therefore, dealers of commercial banks constantly monitor the global economic situation. They try to use every convenient moment in order to get the maximum benefit. The most famous commercial banks in the world are: Deutshe Bank, Citibank, Barclays Bank, Chase Manhattan Bank, Standart Chartered Bank and others …
Central banks of states
Central banks are called upon to implement the monetary policy of states. One of their main tasks is to stabilize the exchange rates of their currencies. They do this through verbal, covert and explicit intervention. In the first case, they have a psychological effect on market participants, in the second, they keep the rate of the state currency in a certain range (30-100 points), in the third, they sharply buy or dump the necessary currency in a huge amount (at this time, the rate can change by 100- 300 points). Traders from all over the world are closely following the meetings and speeches of the heads of central banks, as this significantly affects the Forex market. Changes in interest rates, reserve standards, rules for conducting banking operations, the volume of money supply - all this reflects the economic policy of the state and can positively or negatively affect the exchange rate of the national currency. The most important central banks and financial institutions that have great influence on the foreign exchange markets are: the US Federal Reserve, the European Central Bank, the Central Bank of England, the Swiss Central Bank, and the Central Bank of Japan. There is a special banking system in Europe. It includes the ECB (European Central Bank) as well as the central banks of the members of the European Union. Since Germany is the largest and most developed economy in the Old World, the influence of the German central bank Bundesbank is most significant. In the United States, economic policy is determined by the Federal Reserve System.
Brokerage houses
Brokerage houses are typical representatives of the interests of legal entities and individuals, acting on the stock exchange in the person of their brokers and exercising a wide range of their powers in the sale and purchase of currencies, as well as other operations with them in the Forex market. Having a fairly large staff of highly qualified specialists in the field of foreign exchange transactions, brokerage houses provide invaluable assistance and assistance both to large industrial conglomerates and corporations, and representatives of small firms and companies, as well as individuals. At the same time, they have a fairly significant impact on the dynamics of capital movement on all stock exchanges in the world.
Insurance funds
Insurance funds have at their disposal significant financial resources that allow them to play a significant role in the exchange markets. In their financial strategy, they use the insurance reserves of their funds. In order to extract maximum benefits, cash is mainly invested in the short and medium term.
Investment funds
Private investment funds and companies are among the most active participants in commodity, stock and currency exchanges. They attract significant funds both from large corporations and companies and from private investors. Investment funds have their own strategies for trading the financial markets. They try to adhere to a cash diversification policy. Thus, these organizations minimize possible losses and increase the chances of getting substantial profits as a result. Sometimes they carry out rather risky operations, wanting to get the maximum benefit. Sometimes this brings high costs, but most often investment companies manage to correctly predict the situation in the financial markets and invest their funds profitably. In addition, they buy securities of foreign countries and actively trade on changes in stock prices.
Hedge funds
These are private investment funds that include a limited number of investors and conduct quite aggressive market trading. Most hedge funds try to register in offshore zones, as they avoid undue attention from the official market regulators. In addition, they invest their financial resources not only in currency, but also in stocks, bonds, financial derivatives (futures and options). All this allows hedge funds to increase their income. However, it should be noted that investing in derivative financial instruments is associated with great risks. The total number of hedge funds is constantly growing. They play an important role in the formation and operation of financial markets. Hedge funds, competing with other active participants in financial markets, sometimes accumulate huge amounts of money in their hands. They attract on favorable terms the resources of pension funds, private companies and banks. Unlike many others, in order to achieve substantial profits, hedge funds do not hesitate to invest in rather risky schemes of foreign exchange and material transactions, therefore they often win thanks to their flexible policy of multivariate investments.
Export and import companies
Export and import companies are the ones who constantly shape the supply and demand for national and foreign currencies. They carry out their operations on the market mainly indirectly through various banks on the territory of certain countries. Thanks to them, there is a revival of exchange operations, especially during a period of falling market prices, or during a period of lack of volatility on the exchange.
Private persons
As a rule, these are ordinary citizens who, like large participants in currency exchanges, want to earn money. Since they cannot have direct access to financial markets, they have to act through intermediary brokers and brokerage companies. The main difference between private individuals and others is that they can enter the market with minimal amounts of money (from $ 10 to $ 1000). The markets for stocks, bonds, commodities and stock markets do not provide such an opportunity and require investors to have at least $ 5,000-10,000 in their pockets. For this reason, Forex is a more popular way of earning extra money for the common population of the planet.
The international currency market starts functioning from 3 am on Monday and continues to work until 1 am on Friday. In addition, there are trading sessions on the Forex exchange - Asian, European, American, Pacific. The first works from 03:00 to 11:00, the second - from 10:00 to 18:00, the third - from 16:00 to 01:00, the fourth - from 00:00 to 09:00. Thus, trading sessions replace each other, which allows the Forex market to work around the clock. In addition, each of them has its own characteristics. So, the American session differs from others in great activity, that is, during this period, participants in currency exchanges perform many transactions in the market. This leads to the fact that currency rates fluctuate very much in one direction or another. European and Asian have average activity. The Pacific session is distinguished by the fact that during this period the market is quite calm.
The international Forex market continues to conquer the hearts of an increasing number of novice traders. It has many advantages and provides an opportunity for anyone to regularly earn good money. Forex trading requires every trader to constantly improve, learn, control their emotions and keep abreast of the latest world news and events.
