The market where convertible currencies can be exchanged for another convertible currency or other currencies is called the foreign exchange market.
A convertible currency is hard currency or any currency that can be bought or sold without any restrictions as it is not controlled by a central bank or regulatory institution.
The foreign exchange market takes its name after the fact that when one currency is converted into another, one is considered domestic and the other foreign. When it comes to who can participate in the foreign exchange market, the answer is simply everyone: from multinational corporations operating in several countries to traders and tourists travelling across two currency zones. With countries having their own currencies, foreign exchange markets will always exist serving businesses, governments, individuals and institutions.
When we talk about exchanging or converting currencies, we also talk about the exchange rate, which is the price of one currency in relation to another one. It is the relative price of the two currencies. Foreign exchange rates can be quoted directly, which means the exchange rate can be expressed as the number of units of the home or domestic currency per unit of the foreign currency.
FX rates can also be quoted indirectly as the exchange rate can be expressed as the number of the foreign currency units per domestic currency unit. If, for example, the exchange rate between the US dollar and the euro was on August 20, 2019 in Germany €0.90085 and $1.1101, then the first one is a direct quotation and the latter an indirect one. This is simply because the first one is from the point of view of the domestic country of the euro.
Foreign exchange transactions involve the buying and selling of one currency for another under various circumstances. We have the inter-bank activity for foreign exchange which occurs between banks, the wholesale Forex business and the retail Forex business for the banks’ or financial institutions’ clients. When banks, foreign exchange agencies, and international financial institutions provide foreign exchange services, they do so for a fee. A bank’s quote to buy a foreign currency will be less than its offer quote for the same foreign currency. This is what is called the bid-ask spread.
Looking for the necessary information about how the foreign exchange market works can be discouraging, so we have gathered some of the most essential details on forex trading, cryptocurrency trading as well as how to use forex signals, so you can get started.
Forex trading is not a science, but something more intricate, that changes according to the markets. As there is not one book that will teach you everything about trading, it is good to keep your eyes open and absorb as much knowledge as you can. This will allow you to better understand what drives currency price movements and how to use the fundamentals of trading to trade FX successfully. As Brent Donnelly wrote in The Art of Currency Trading (2019), “Currency trading is like playing the piano. The mechanics are very simple (just press a few keys!) but mastery takes a lifetime.”
Whether you want to become adept at forex or cryptocurrency trading or simply use forex signals to save time from analysing the markets yourself, here you will find all the necessary info to start doing so. Our objective here is to help you increase your expertise and reach your goals in the foreign exchange market.
Forex trading has evolved dramatically over the years as technology and regulations have helped shape it and transform it. It was in the late 1990s that retail forex trading started as computing power improved, regulations changed, and the internet changed the lives of individuals who could now trade FX with limited capital using leverage. With the rise of brokerages, trading conditions have also changed, helping retail brokers gain access to tighter spreads and better software. When trading forex, it is important to have a very good grasp of the basics, from the terminology, to the market structure, volatility and liquidity.
Cryptocurrency trading is like trading forex but with digital money. This means you can exchange unique digital forms of payment like Bitcoin, Ethereum coin, Litecoin for USD. Cryptocurrency trading is a great way to get involved in cryptos as it only requires you to have a good understanding of what cryptocurrencies are and how they work. To buy and sell cryptocurrencies or cryptos you use crypto exchanges.