What is Forex Trading: You may have already come across this particular term if you are here to learn about Forex Trade. You also may have already gone through many definitions to learn about Forex Trade. Forex simply means FOReign Exchange, which is the exchange of money between two countries.
Well, it’s not just about that, let me explain you in simpler language. Have you ever traveled to a foreign country? Yes? Well, this simply means that you have been in a forex trade. Remember that you have to exchange your money into the foreign currency. Which means you will be changing your domestic currency in the foreign currency and this process is carried out through Forex Trading.
And when you exchange your domestic money into a foreign one then you will have to consider in the Foreign Exchange trading is taken into account depending on the demand for the Worldwide Exchange Rate. What Do I Mean By Worldwide Exchange Rate? Let me explain that too. Just like you are going to exchange your domestic money into the foreign currency, say from Indian Rupees to US Dollars the rate that you are going to get while exchanging the money will be depending on the world wide demand for that certain exchange.
How the Demand for a Certain Currency Changes the Forex Currency Exchange Rate:
"Forex is the World's Most Traded Market, having an average turnover in excess of US$5.3 trillion."
Now, think yourself as a multi-trillionaire company which is running on USD. And your main source of materials comes from India, so whenever you will be in need for materials, there will be a huge exchange of money from your US currency to Indian currency, you will be simply going through the term Foreign Exchange and also in the process will be changing the rate of currency because of the huge demand for the Indian currency. Which simply means, more the demand for a specific currency exchange the more the price it will be having.
What is Forex Trading – About Forex Currency Pair:
Forex Pair will be the simple symbology used for the 2 currency notice that will be used by the Forex to represent their exchange which will depend on from which currency they are being changed into. For example, if you are going to change your USD to Euro then Forex will note it by EUR/USD.
This will be represented by the currency that you want on the Left, i.e., EUR on the left and your base currency, i.e., USD. So if you want to exchange your Indian Currency to US currency, it will be represented by USD/RS by FX aka Forex.
And this is where the value of the exchange is determined too, and you will also have to note that at what amount you will be getting the certain exchange.
What is Forex Trading – About Exchange Amount:
Now that you already know that the more the demand for a particular currency the more the price it will be. Do note that there is always a certain amount of currency that will be the base amount for the exchange of two currencies.
So you can take note that, if the USD ahs more demand then Euro you will have the pointer something like 1.30433. And this is where things get a lot interesting for many people who are into making a little more money.
Benefits from Forex Trading:
When you are into Forex Trading, you will be noticing a huge chance of making a lot of money (if you study the market well). Take the example of you going to a vacation destination abroad. So let continue, you exchanged your domestic money for the foreign exchange rate lets assume that you exchanged Rs 50,000 for USD 7000. And went to the airport and as soon as you landed you had a call from your office that you have to return for an important client meeting.
You boarded the flight back with all the cash right in your hand, and after you had reached home, you got busy with your work. Days passed by and then suddenly you remembered to exchange back the USD 7000. You went to the exchange office and returned the USD 7000 hoping to get a return of Rs50,000. But your luck you got more than just Rs50,000.
So what was that about? Well, it can be explained in a simple term. Change in the value of the foreign exchange rate or commonly reffered by the brokers at Foreign Exchange as Peer Rate.
So, Why did you end up getting more then you took?
The peer rate between two counties keeping on chnaging many times in a day. In a noraml situation, the country which has been invested up more for right or services will face the increase of more of a peer rate.
And this explains why you got a higher amount of money when you didn’t spend a penny of the money you exchanged in the Exchange Office.
How Can That Be Beneficial to You?
First of all you will need to study all the points mentioned above and learn as much as you can about the increase in Forex pointer value and whn you are done you can go ahead with this tip. Now take Forex as an investors center. You had exchnaged your domestic currency for the foreign currency and expect spending it you will be holding the currency in your hands and will be waiting for the time when te pointer for the peers will be turned upside down.
Which means you will just be witing for the time when the domestic value of the currency will be more then the amount when you have exchanged the money before and then all you have to do is go ahead to the exchange cetre and exchnage the money back.
Keep In Mind:
You will need years of study to understnand even the slightest change in the pointer and peer value of the of the counties you will be exchnaging the curriencies for. So keeping this in mind it is not recommand for any general person to hold on to foreign currency on their hands as this counld lead to loss of value of the mney if not studdies and examined properlay by a Forex broker.
So, enjoy this excellent service as a mean of currency exchange and next time, enjoy your trip and try to save and bring back a little buck and save a lot in the save purpose.