Forex in Ipoh is an international over-the-counter market, where currencies are traded. Due to the high liquidity and volatility, trading in the foreign exchange market has become an additional source of income. Daily turnover in the Forex market exceeds all the world's financial markets.
What is Forex
Forex (also abbreviated as FX) stands for foreign exchange market. The main principle in the Forex in Ipoh market is “buy cheap, sell expensive”, just like in any other market. Forex trading in Ipoh means the process of exchanging one currency for another. Traders make profit from the difference between Ask and Bid prices. There are two types of transactions on Forex in Ipoh, they are called positions or trades. It is either a position to buy, or a position to sell.Forex in Ipoh allows trading many currencies. More than 80 currency pairs are traded in the Forex market. Currencies are always traded in pairs. If you buy one currency, you sell another one and vice versa. For example, in the EUR/USD currency pair you buy EUR and pay for it in USD, the value of the currency pair shows how much dollars you need to give for euro.
About foreign exchange market
Forex in Ipoh is the largest market in the world. According to the Bank for International Settlements, its daily turnover reached $5.1 trillion in 2016.
About 51% of daily turnover is from financial institutions. The 42% accounts for the reporting dealers – institutions that execute exchange transactions both on their own or on behalf of customers, such as large commercial and investment banks, as well as large corporate firms, governments, non-financial institutions. The remaining 7% of the FX turnover are non-financial customers – corporations, non-financial government entities, individual investors.
The most traded currencies are majors. Majors are currencies paired with the US dollar: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD. The share of all transactions with its participation accounts for 88%. Speculators get the best opportunities while trading with the main currency pairs. Currency pairs that do not consist USD are called cross pairs: EUR/JPY, EUR/CHF, GBP/JPY, EUR/GBP etc.Forex in Ipoh is open around the clock, except for weekends and national holidays. Banks and traders work in different time zones, therefore, when trading is already finished in one country, in another one it is just starting. Forex trading in Ipoh begins with the Pacific session, and moves around the world, first to Tokyo, London and ends in New York.
There are 4 trading sessions: Pacific, Asian, European and American. Each of the sessions has its own characteristics, which every trader should know. Trading sessions differ in trading activity. For example, the Pacific session is characterized by weak volatility, and the American has high liquidity and is considered to be the most aggressive. The period when trading sessions overlap with each other is the most active, as at that time large liquidity is observed in the market.
Forex is considered to be over-the-counter market and does not have an established location, transactions are conducted through the special trading platforms. Traders make transactions from around the world. Trading platforms are the software that requires installation on a PC or a mobile device, but there are also browser versions that require only the Internet access to work with.
The currency market is characterized by the possibility of conducting transactions with an amount significantly exceeding the size of a trader's deposit. This effect is called the leverage. Leverage is presented in a proportion, for example, 1:100. This means that if a trader has 100 USD of own funds, he can use 10 000 USD in trading.
Who are Forex market participants?
All market participants are directly related to each other, but each has its own goals - hedging, regulating or speculative. The last group is dominant, since most of the Forex in Ipoh trades are conducted for the purpose of making a profit on the difference in exchange rates.
Central and commercial banks
Central banks are responsible for providing financial services to the government. Central banks have a regulating function, they control and manage the national currency. The main functions of the central banks are money supply control, exchange rate regulation, price stability. Central banks can pursue a policy aimed at raising or lowering the exchange rate of the national currency, as well as directly affect prices by means of the currency intervention. In the Forex market, central banks perform their direct function, they regulate the value of their currency.
The most influential central banks are the Federal Reserve System (the Fed), the European Central Bank (ECB), the Bank of England (BoE), and the Bank of Japan (BoJ).
A special place in the structure of Forex in Ipoh is occupied by commercial banks – financial institutions that provide banking operations both for legal entities and individuals. They provide liquidity to the Forex in Ipoh market, carrying out the main trading volume. Other participants of the Forex market have the accounts with commercial banks and make the necessary conversion operations with them. In addition to the clients` requests, banks can conduct transactions independently for speculative purposes. Popular banks are Deutsche Bank, Barclays Bank, Union Bank of Switzerland and others.
Commercial companies
Participants of international trading are interested in exchanging currencies. Exporters need to sell foreign currency, importers need to to buy. Companies engaged in import/export activities provide stable demand/supply for various foreign currencies. Large corporations use Forex to exchange currency, make short-term deposits, hedge their transactions from future fluctuations in rates. Since such companies do not have direct access to the foreign exchange market, they conduct conversion and deposit operations through the commercial banks.
Investment and Hedge Funds
Various funds, such as investment, hedge, pension funds, take part in currency transactions. They make large long-term investments. Funds carry foreign assets and place funds in various financial instruments: securities of governments and corporations of different countries, bank deposits.
Forex companies: brokers and dealing centers
Brokerage companies bring the buyer and seller together. At the same time, brokers charge a certain fee for their work. In most cases, it is the so-called spread – the difference between Ask and Bid prices, as well as the commission for processing transactions.
Investors and speculators
Individual traders or investors come to the market for profit, speculating on the fluctuation of currency pairs. They got the opportunity to use Forex in speculative purposes in 1986. Traders carry out transactions through brokerage companies, ie they buy the currency cheaper in order to sell it for more expensive price. All transactions are made in trading terminals provided by forex brokers. Thanks to them, the trader gets an access to the market and quotes, and the ability to perform fundamental and technical analysis to make the right trading decisions.
What does influence the market?
Economic and political factors, as well as various events in the world have a significant impact on Forex. Forex in Ipoh is sensitive to economic aspects, in particular, to the gross domestic product (GDP), gross national product (GNP), inflation, interest rates, and unemployment statistics etc.
Economic factors influences the prices in the Forex market the most, the economy of country predetermines the price and movements of its currency in the international market. The political events and the actions of the authorities are also the intense focus of attention. Every political decision can affect the economy of the country and the price of the national currency.
The history of Forex trading
Many centuries ago, when trade relations were just beginning, various items were means of payment. Teeth, feathers, precious stones served as money. Such kind of economics was based on the barter system. But barter relations were not very convenient and a necessity to create a universal exchange equivalent occurred.
Coins of different denominations appeared. They were casted from copper, silver, and bronze. The metal used to make coins changed over time. Initially, monetary systems were based on bronze, then on silver, and later on gold. In Central Europe, the silver standard existed in the 7th-14th centuries. Later, the gold standard came – a monetary system in which a unit of currency was equivalent to a certain amount of gold.
The first appearance of paper money dates back to 910 due to the paper industry development in China and the acute shortage of gold. They differed from the modern banknotes and looked like sheets of A4, and issued as a document to merchants. First paper money were created for convenience and simplification of goods turnover. Initially, paper money was a certificate that granted ownership on a certain amount of gold, fixed in denomination.
In 1867 in Paris the system of the gold standard was adopted. But during the world crisis of 1929-1933, all developed countries of the world refused to use the gold standard. In 1944, at the conference held in Bretton Woods (USA), it was decided to replace the gold standard with the gold-exchange standard. According to the results of the Bretton Woods meeting, the US currency was attached to gold and other currencies to the US dollar.
The Bretton Woods system functioned successfully in the world until the late 1960s. In 1971, the US President Richard Nixon abandoned the gold standard. In December 1971, the Smithsonian agreement was reached in Washington, according to which currency fluctuations within 4.5% were permitted instead of 1% (within 9% for currency pairs that do not contain USD).
On January, 1976, in Kingston (Jamaica), the participants-members of IMF signed a new agreement. They refused to set the official price for gold, and limits on changes in the currency rates. The history of currency exchange begins.
Learn Forex trading
Forex Trading
Forex trading is very popular among investors. The international over-the-counter Forex market is open and accessible to everyone. To enter the market, you don't need large initial capital. High liquidity, 24-hour access, leverage, wide range of financial instruments attract traders around the world who are guided by the goal of obtaining both additional and basic income. When starting forex trading it is important to learn both the market and basics of the Forex trading and understand core money management rules.
Forex trading basics
Forex is a foreign exchange market, where every second the currency exchange transactions take place. The main instrument in the Forex in Ipoh market is the currency pair – the price of one currency in relation to another. Currencies are sold one after another. Currency pairs are denoted as follows: EUR/USD, USD/JPY, GBP/USD, where the first currency in the pair is called the base currency, and the second one is known as the quoted one. For example, in the EUR/USD currency pair, the euro is the base currency, and the dollar is the quoted currency, which means that the trader can buy one euro for a certain amount of dollars.
Quotation is the value of the base currency, which is expressed in units of the quoted currency: EUR/USD = 1.1930 means that one euro is worth 1.1930 dollars. The quotation consists of two values: the bid price at which the trader can sell the currency, and the ask price at which the trader can buy one unit of the currency.
The difference between ask and bid prices is spread. Spread is measured in pips, the unit of measurement of price change (usually 0.0001).
Technical and fundamental analysis
Successful trading is impossible without a competent analysis of the market. To forecast the market movement and currency fluctuations, fundamental and technical analyses are used. The technical one is based on forecasting with the help of charts and technical indicators, the fundamental one is based on the analysis of factors affecting the exchange rate of the national currency.
The fundamental analysis takes into account statistical data, political events and macroeconomic indicators – all that can strengthen or weaken national currencies. The trader assesses the state and prospects of national economies in order to foresee the future direction of the price movement.
The technical analysis is a method of forecasting the price movement based on the analysis of its behavior over past periods. Researches of technical analysts rely on the price and what happens on the chart. The chart displays how the price moves, which allows tracking the significant trends of the market, changes in demand and supply.
Online currency trading
Forex trading is a popular method of earning. If earlier the foreign exchange market was available only for banks and financial institutions, today everyone can trade here. One can start trading on Forex without having a lot of money. Many brokers do not demand a minimum deposit. Moreover, one can trade sums higher than the deposit using leverage. But the leverage is not always a profit. The use of the financial leverage is associated with risk.
Forex is the market where one can try to trade without risks. Demo accounts are good training instrument. They are almost identical to the real ones. Their main difference is the use of virtual money for trading. All profits and losses received during trading on a demo account are also virtual.
Forex is the round-the-clock market. Unlike the stock market, where working hours are limited, the currency market is available 24 hours a day.
Forex provides an easy access to trading. The foreign exchange market does not have a specific location. To carry out transactions, one need an FX trading platform. Software developers consider the needs and opportunities of traders and offer different versions of platforms: for PCs, as well as smartphones running Android and iOS, or web-based ones. Trade with the regulated and reliable company.
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