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The global financial market for currency exchange is called Forex (short for English words, foreing exchange is foreign exchange). It appeared in 1976 after the world economy switched from the “gold standard” to free exchange of currencies. The need for this step is explained by the fact that it was necessary for the free movement of financial flows between different states.
The original purpose of “Forex” is currency exchange, but over time, people learned to make money on the difference in exchange rates, and such speculation became for many a source of good income. After all, currency rates are very unstable, which makes buying and selling currencies really profitable.
ADVANTAGES OF FOREX
HIGH PROFITABILITY OF TRADE
“Forex” for many has become not only a profession, but also an excellent way to preserve and increase capital. The profitability of trading on it is much greater than the rate of inflation. Traders can get high personal income.
GETTING PROFITS OUTSIDE DEPENDENCE ON MARKET TREND
You can trade Forex profitably, regardless of whether exchange rates are rising or falling. After all, the fall of one currency entails the rise of another. This advantage distinguishes the currency market, for example, from the stock market, where only one trend often dominates, which complicates trading and does not allow making profit from short-term deals.
The above feature of "Forex" protects trading on it from the influence of economic crises. If this happens, the stock market may collapse altogether, and the currency market continues to work as if nothing had happened.
ROUND-THE-CLOCK OPPORTUNITY TO EARN
It is possible to conclude transactions on "Forex" 24 hours a day. This is possible because its trading platforms are located around the world in different time zones. Trade is terminated only on weekends. Well, 5 days a week, "Forex" works around the clock.
THE MARKET IS NOT ATTACHED TO A SPECIFIC LOCATION
"Forex" has no physical location. Transactions on it are made with the help of computer programs-terminals. You can sell and buy currency with their help from any place on Earth, provided you have access to the Internet.
INTERESTING TRADE PROCESS
Trading in Forex is not only profitable, but also interesting. To increase profits, you need to follow the world news and learn new features of the market.
Central banks of different countries
Central banks of states influence the rates of their national currencies by buying or selling them on the domestic interbank market. In addition, they determine important credit indicators (for example, the refinancing rate), which can also fluctuate national currency rates significantly.
Commercial banks are the main Forex market makers. They are the ones who “make the market” because all the exchange transactions are made through them. This forms the overall supply and demand, which determine the exchange rate.
Company Importers and Exporters
A huge number of transactions in the financial markets are carried out by companies engaged in exporting or importing various products into their countries. They sell the received foreign currency for national. On the other hand, they need to buy the currencies of various countries where their international partners are located.
The main goal of various funds (investment, pension, insurance, hedge) - is making a profit. The size of such funds is large, so they spend their volume on Forex in large volumes, which also greatly affects the value of a particular currency unit.
Dealing centers "Forex"
These are non-bank organizations that provide their customers with the opportunity to enter into transactions in financial markets with small amounts of their own trading capital. At the same time, customers can not only work in the Forex market, but also perform trading activities also on CFD markets (contracts for difference). Trading through dealing centers, as a rule, is carried out using special programs, such as TeleTrade's MetaTrader.