Exchange rate

One issue that matters much to people that every day is to know about foreign currency exchange rates change. This time, let's talk about the different types of change that are handled in the Forex market.

Importantly, in this part of the post, in an operation rate each of the parties undertakes to pay the other a certain amount of currency at an agreed date.

Within these operations, we find the following:

Direct exchange rate: the amount of national currency units to be delivered by a foreign currency. As an example, we use the ratio of euro / dollar.
Indirect exchange rate: as the direct, is the amount of foreign currency to be delivered by a unit of currency, but in this case the ratio is reversed the relationship, which would be dollar / euro.
Spot exchange rate: known as spot market as it is a spot transaction where the date for delivery, which is almost immediate.
Cross rate: known as Cross Rates, is the exchange rate between two currencies, and is so named because it is not common in the country where the currency pair is quoted. For example, in United States GBP / CHF would be considered as a cross rate.
Forward exchange rate: This transaction aims to cover the risk by the difference between the two types of change that an operation is performed. Thus, one can arrange the delivery of some goods to a month, and if the currency in question was the euro, between the date of the agreement and delivery of the goods the dollar could rise against the euro, which the months would cost the seller.
Therefore, there is this "type of coverage" to the risk of buying euros in cash and repay debt term.

How to Trade in Forex Market ?

Forex investments are made through online platforms or on the phone. The investor can buy market (share price at the time) or take orders to buy or sell at a certain level. Once you open a position you can place orders related to making profits or limit losses. We cite the following example:

An investor decides to buy EURUSD at a price of 1.33 and related form may place a limit sell order to take profits if the price reaches 1.3360 or a sell order to limit losses if the market drops to 1.29.

Thanks to the liquidity of the Forex market is possible with significant investment leverage, for example, an investor may open position by $ 100,000 using only a 1% margin.

Once an investor enters the market to effect the loss or gain should do the reverse for the same amount, ie if you have a long position (long) per 100,000 EURUSD should sell euros against dollars for the same amount. Due to the volatility of the currency market an investor can close or balancing their position within seconds of having taken large gains.

What is Forex market ?

The foreign exchange transaction involves the purchase of the currency of a country and the simultaneous sale of the currency of another country. Currencies are traded in pairs, ie if the investor decides to buy a cross, as is buying GBPUSD pounds (long or long) and simultaneously selling dollars. Conversely, if we assume a short position (short or short) in the same junction will be selling pounds and buying dollars.

Currently the forex market is the largest financial market and liquidity, most transactions are conducted between the U.S. dollar (USD), euro (EUR), Yen (JPY), Pound (GBP) Swiss franc (CHF) and Australian dollars (AUD) and Canadian (CAD). It is also possible to operate cross of gold (XAU) and silver (XAG) against the major currencies.

The forex market is developed through an electronic network that connects individuals, corporations and banks, without having a physical location or a bag to centralize all operations. Unlike the stock market, the Forex market operates for 24 hours. Any individual or institutional investor can access this market at a reduced cost and with significant leverage across different operating platforms online.

The online trading platforms available in the forex market quotations show every moment of the different crosses, while providing different types of charts and indicators to improve investment decisions. Much of Forex investors do for speculative purposes, taking advantage of the inherent volatility of this market.