Forex – the interbank exchange market was formed in early 1970 as a result of replacement of the currency policy that was already fixed in the world trade with a changed currency policy. Henceforth, the principle of agreement between buyer and seller has begun to serve as a basis for mutual exchange of separate currencies. For its volume of trade, Forex market remarkably prevails over the turnover volumes of commodity and stock exchanges. The daily amount of the trade transactions made in currency market is 1-3 trillion US dollars which are 4-5 times more than the amount in the stock markets. Investments in currency transactions have the potential to derive profit in largest amounts. Forex market allows gaining substantial revenues in a short run making it possible for individuals, including traders-beginners to join in currency transactions with smallest funds.
Unlike traditional financial markets, Forex does not require a special trading platform as in the sale of stocks and currency futures. Trading transactions in Forex market are made via computer terminals and mobile phone devices. Trading sessions have a time limit in futures and stock markets, while Forex market is open for trading for 24 hours 5 days a week. You may always find a Forex broker in any time zone of the world (Sidney, Hong Kong, Tokyo, London or New York) to make currency trade transactions with favourable quotations.
The core operational principle of Forex market includes selling of a currency previously bought for lower price based on trader’s assessment of external factors for more expensive price later and thus receiving profit, or vice versa.
Suppose that you have certain free funds in dollars aimed at Forex trading. Based on technical and fundamental analyses, you come to the conclusion that dollar will drop and euro will rise in the next few days. In such case, you sell your dollars and buy euro at the existing rate. A bit later, as you have predicted, dollar falls and euro rises. Consequently, you sell euro and buy dollar. But in this case, the total amount of the dollar you have bought will be, as a result of the fall in dollar prices, more than the dollar amount you first had and this difference will make your profit. A trader can make dozens of such trading transactions during a day.
Change in the exchange rates in Forex market
Exchange rates are formed based on the demands and supplies of banks, financial institutions, corporations, as well as individuals and may undergo changes every second. Everyone who buys or sells currency becomes a participant of Forex market and influences to this or other extent on the formation of exchange rates. Besides, various factors such as political, macroeconomic and other significant global phenomena may also have an impact upon change in exchange rates.
The methods of analyzing and forecasting change in exchange rates
Various methods are used to forecast exchange rates. The major ones are the methods of technical and fundamental analysis.
- Technical analysis is based on statistical data. Based on these data the analysis of technical figures and trend indicators pinpointing the moving direction is very important.
- Fundamental analysis is made through learning of economic indicators of leading countries of the world.
- The profound development of information technologies, especially Internet and mass computerization allows exchange market participants to make trading transactions in a virtual environment through Internet.
- Internet-based trading substantially simplified making trading transactions for various financial instruments in a short run and without any obstacle.
- The availability of Forex trading as well as financial securities through Internet by moving currency trading transactions from special trading areas into computer-based trading terminals makes it possible to conduct such transactions from everywhere, including home.
Opening a trading account and starting to work
In order to start working you should open a real trading account. Upon your registration, you are opened a marginal account by the MFX-Trading Investment Company. Then you may start working having downloaded MFX Trading Station which is based on MetaTrader 5 platform, which is connected to the world’s trading sources and stock-exchanges.
Free of charge training account
Anyone who wishes to gain trading experience may open a training account which is free of charge and works without a time limit. The training account is considered the most reliable way to master the secrets of Forex trading.