FOREX is an international platform that never rests. It operates around the clock on all seven days of the week. It is a large market that continues to expand. It’s Daily average volume now exceeds USD 3.2 trillion with over 2 million individuals executing approximately 4 million transactions between them.
Technology has now made the FOREX market accessible to anybody with a reliable internet connection, therefore it is no surprise that many have taken up to try their luck at it. The majority of the FX business is commission and tax free, this is another reason people are intrigued to get their hands dirty.
The golden rule
Forex trading Australia and a lot of other countries now have many individual retail traders that indulge In FOREX transactions. Their investment often comes from savings or bonuses and rent receivables. It is important to keep in mind that if the said funds are required for living expenses one should never opt to invest same in FOREX. Putting it simply it means never trade money you can’t afford to lose.
WHAT DOES THE FX MARKET COMPRICE OF?
In a broad sense, each and every purchase we make impacts a shift in the demand and supply for the specific currency we are transacting with. Therefore we are all unconscious participants of the forex market. However the active stakeholders are;
- The large international banks, financial centers and foreign exchange brokers that function as the facilitator fortrading between multiple types of buyers and sellers from around the world.
- The statutory bodies appointed to monitor that all FOREX participants adhere to strict capital requirements and implements, internal procedures including risk management, ongoing staff training, and a stringent accounting and auditing processes. For forex Australia it is the Australian Securities and Investment Commission (ASIC).
How does a forex trade work?
The foreign exchange rate refers to the number of units of a certain currency that needs to be sold in order to purchase a unit of another currency. This is determined by the demand and supply for the said currency. The value of a certain currency is never a stand-alone. It is always presented in relation to another currency, hence the term ‘’foreign exchange rate’’.
Ex: 1 USD is worth X JPY
It is essential that a transparent standard exchange rate is in place in order to facilitate international trade. The highest number of FOREX transactions happens between the USD and another currencies therefore it is the norm to bench mark currencies against the USD.