FOREX (FOReign EXchange Market) is a total volume of the international currency exchanges at the market exchange rate. FOREX appeared in January 1976 in Kingston (Jamaica). At that meeting of the ministers of the countries - IMF members a new agreement was made to launch floating currency rates.
There are two reasons which make FOREX independent and attractive for investments. The first reason is that currencies are also goods, necessary for everyone. For example, an American company needs JPY to pay for the Japanese cars it is going to buy. Whereas the Japanese need EUR to buy parts for new engines from Germany. For different reasons every country needs foreign currencies. The second reason of FOREX popularity results from the first one. As the supply-demand situation for every currency changes constantly the rate of the currency of the country-buyer and the country-seller also changes. Different factors and economic conditions of each country also impact the currency rate of each country (labor capacity, inflation, unemployment etc.)
Trading in the FOREX market enables earning at the difference in the exchange rates
Rate is a value of the base currency unit, denominated in the quoted currency. E.g. EUR/USD is equal to 1.5796 means that 1 EUR costs 1.5796 USD.
There are always two quotes in a rate. A buy rate is called “ask” (it is on the right) whereas a sell rate is called “bid” (it is on the left). At the Bid price you can sell the first currency of the currency pair (in our example it is EUR) and buy the corresponding quantity of the second currency there (it is USD in our example). At the Ask price you can buy it selling the corresponding number of the second currency.
The main principle here is the same as in the stock exchange, that is to buy at a lower price and sell at a higher one and the order is not important, as you can get money whether a currency rises or falls.
You have a unique chance to understand what it is to be a trader and make a deal with the help of our demo spot, demonstrating the main principles of work in the FOREX market.
How to Make a Deal
