What is Forex? How to Invest? Forex is an abbreviation of the word exchange, which refers to the conversion of the currencies of two countries to each other. Over time, after forex trading became popular, not only currencies, but also commodities entered the forex platforms and began to be traded as forex products. It is known throughout the world that the Forex market is the largest and most liquid market in the world. According to BIS (Bank of International Settlement) data, the daily trading volume in the foreign exchange market is about $ 5.5 trillion.
What is Forex? How to Invest?
What is Forex? How to Invest? The fact that even small amounts of investments can be bought and sold due to the leverage factor in Forex markets has made the market so attractive. Although there are countries and institutions in the world where a leverage ratio of 1:400 is used, or even a leverage ratio of 1:1000 is used, it is still impossible to be successful in this market with high leverage ratios. The leverage ratios in each brokerage house subject to the Capital Markets Board (CMB) in England are limited by the legal limit determined by the CMB.
With the press release that entered into force on February 10, 2017, the maximum initial deposit amount was determined as GBP 50,000. The leverage ratio was also revised to a maximum of 1:10.
Although Forex markets are similar to stock and futures markets in many ways, they are markets with very different and unusual characteristics. We will see the differentiating features of forex markets in the later steps of our article, but the best way to explain which aspects of forex work according to the characteristics of the over-the-counter market is to compare the functioning of forex markets.
In short, What is Forex; It is a free market based on currency trading with high returns. It consists of abbreviations of the English words Foreign Exchange. Its logic is based on making a profit with the exchange rate difference between currencies.Dec. It aims to make a profit with the exchange rate difference Decoupled between the currencies. To explain what Forex is, we can give the following example taken from everyday life: you buy dollars during a period when you think the dollar will rise or notice that it is rising, and then if it reaches a certain height, you can make a profit by converting it to GBP.
How are Prices Determined in the Forex Market and According to What?
Banks all over the world have their own unique cash flow associated with each currency. There may be a large number of money inflows and outflows to banks. In this case, banks want to sell their excess currencies on the interbank market and buy other currencies that they need to regulate their cash flows and meet the cash needs of their customers and themselves. Dec. Banks are present as market makers in almost all currency pairs and spot commodities, such as gold and silver. These banks ensure the formation of prices in the forex markets.
Prices from these international banks, which create the prices, are transmitted to stock exchange brokerage institutions through networks. The networks we are talking about in our Forex article are called forex price networks. Examples of these channels are Reuters, Bloomberg, Currenex, Hotspot FX, Flextrade, etc. it can be given. companies can be viewed. Foreign exchange companies apply their own revenues (mark up) to the prices coming from these networks and transfer them to the end user, i.e. investors.
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