TODAY DOLLAR RATES FOR BUSINESS
The foreign exchange market (forex, FX, or currency market)
is a global decentralized market for the trading of currencies. The main
participants in this market are the larger international banks. Financial
centers around the world function as anchors of trading between a wide range of
different types of buyers and sellers around the clock, with the exception of
weekends. Electronic Broking Services (EBS) and Reuters 3000 Extra are two main
interbank FX trading platforms. The foreign exchange market determines the
relative values of different currencies.
The foreign exchange market is unique because of the
following characteristics:
Its huge trading
volume representing the largest asset class in the world leading to high
liquidity.
its geographical
dispersion.
The variety of factors that affect exchange rates.
The low margins of relative profit compared with other
markets of fixed income.
its continuous operation: 24 hours a day except weekends.
The use of leverage to enhance profit and loss margins and
with respect to account size.
The foreign exchange market assists international trade and
investment by enabling currency conversion. For example, it permits a business
in the United States to import goods from the European Union member states,
especially Euro zone members, and pay euro’s, even though its income is in
United States dollars. It also supports direct speculation in the value of
currencies, and the carry trade, speculation based on the interest rate
differential between two currencies.
Forex is a commonly used abbreviation for "foreign
exchange," and it is typically used to describe trading in the foreign
exchange market by investors and speculators.
For example, imagine a situation where the U.S. dollar is expected to
weaken in value relative to the euro. A Forex trader in this situation will
sell dollars and buy euro’s. If the euro strengthens, the purchasing power to
buy dollars has now increased. The trader can now buy back more dollars than
they had to begin with, making a profit.
This is similar to stock trading. A stock trader will buy a stock if
they think its price will rise in the future and sell a stock if they think its
price will fall in the future. Similarly, a forex trader will buy a currency
pair if they expect its exchange rate will rise in the future and sell a
currency pair if they expect its exchange rate will fall in the future.
What is Forex? What is Forex? : Dollar Rates.IN WHAT AM I
DOING WHEN I TRADE FOREX? Forex is a
commonly used abbreviation for "foreign exchange," and it is
typically used to describe trading in the foreign exchange market by investors
and speculators. For example, imagine a
situation where the U.S. dollar is expected to weaken in value relative to the
euro. A Forex trader in this situation will sell dollars and buy euros. If the
euro strengthens, the purchasing power to buy dollars has now increased. The
trader can now buy back more dollars than they had to begin with, making a
profit. This is similar to stock
trading. A stock trader will buy a stock if they think its price will rise in
the future and sell a stock if they think its price will fall in the future.
Similarly, a Forex trader will buy a currency pair if they expect its exchange
rate will rise in the future and sell a currency pair if they expect its
exchange rate will fall in the future. WHAT IS AN EXCHANGE RATE? The foreign exchange market is a global
decentralized marketplace that determines the relative values of different
currencies. Unlike other markets, there is no centralized depository or
exchange where transactions are conducted.
Instead, these transactions are conducted by several market
participants in several locations. It is rare that any two currencies will be
identical to one another in value, and it's also rare that any two currencies
will maintain the same relative value for more than a short period of time. In Forex, the exchange rate between two currencies constantly changes. For example, on January 3, 2014, one euro
was worth about $1.33. By May 3, 2014, one euro was worth about $1.48. The euro
increased in value by about 10% relative to the U.S. dollar during this
time. WHY DO EXCHANGE RATES CHANGE? Currencies trade on an open market, just like
stocks, bonds, computers, cars, and many other goods and services.
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