FOREX received its name from the English expression “foreign exchange” and covers today all range of operations of buying and selling, deposits and settlements with foreign currency among different participants of this market. For rather short period of time Forex has become a global market for the world economy. Now the total turnover of Forex exceeds 1,3 billions a day which is much higher than the turnover of any other financial markets, for example, stock market. Today Forex has become a global network, consisting of central and commercial banks, exchanges, brokerage companies, investment and insurance funds, corporate and individual traders and private investors, linked to each other by modern telecommunications. This market has no address, has no fixed place and time of work, since all the above mentioned participants are situated in different countries of the world.
The Foreign Exchange market works round-the-clock. Every morning its work starts in the Far East, New Zealand, than Sydney, Tokyo, Hong-Kong, Singapore, Moscow, European financial centers – Zurich, London and comes to an end in New-York and Los-Angeles. The main tradable instruments are the currencies of highly developed countries: Unites States Dollar (USD), Euro (EUR), Japanese Yen (JPY), Swiss Frank (CHF) and British Pound (GBP).
The modern system of this market was formed after cancellation of fixed exchange rates, when the exchange proportions of different currencies became determined by market conditions, i.e. the relation between supply and demand for a certain currency. Economic situation in each individual country (productivity, inflation, employment and etc.) today influence the value of its currency against currencies of other countries and constitutes the basis of its exchange rate fluctuations. The main principles of profitable activity are “buy at the lower price – sell at the higher price” and “sell at the higher price – buy at the lower price”. In order to follow them you should make proper forecasting of growth and fall for a certain currency against other ones.
Example:
You bought 100.000 GBP/USD (British pounds for US dollars). After breaking news about higher than expected unemployment in the United States the rate of British pound against US dollar increased from 1,5700 to 1,5800. Your profit is 1000 USD (without commission).
But it is nor so simple as it may seem from the first sight. Forecasting and analysis of exchange rate fluctuations require hard and careful work, will-power, large volume of knowledge and, no doubts, a certain piece of luck, which is usually exaggerated
