Answers To The Question: What Is The Foreign Exchange Market?
FOREIGN EXCHANGE MARKET – In this article, we will learn about what the Foreign Exchange market is all about.
The foreign exchange market or Forex is a place where individuals meet to buy and sell currencies. This place is a huge global market and is probably the biggest in the world.
There are a lot of reasons as to why companies or individuals would use to forex markets. For example, when a company needs to purchase products or invest abroad.
Naturally, they would need foreign currency to be able to do the transaction. That is where the forex market comes into play.
According to a video uploaded by UKspreadbetting, the interesting part about the market is that its value is made from speculating. This is where companies try to make money from changes in the price of the currency.
With this, companies don’t actually require the currency at all. Adding to this, the forex market is considered as a liquid market.
This meant that the market is easily accessible. It also has plenty of traders and counterparties so there could always be transactions.
This market also offers a lot of opportunities. Unlike the stock market, the forex market is open 24 hours apart from weekends.
When trading, you can buy a currency pair or sell it via a broker. These individuals serve as the middle man for transactions.
They take what is called a spread. This is the difference between the buy-and-sell rate which varies across pairs depending on liquidity.
There is also a financial lingo called rollover. This is when your broker moves the day of your transaction to the next whenever you have a position open.
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