What Affects the FOREX Market
Demand and supply of currency effects the FOREX market , generally the US dollar is most poplar. However money is made in the rise and fall of a wide range of different currencies .
Other factors that effect the rise and fall of currencies in the FOREX market are :
- Political matters (i.e) Change in government ,policy , social unrest ,
- Economic Factors (i.e) Fall or Rise Imports /Exports ,financial Deficit /surplus of country , fiscal stimulus
- Market Psychology (i.e) speculation / rumors of future trends
Any one of the above conditions or a combination of the above conditions can lead to a change in currency value . Zimbabwe is a perfect example of what bad political and economic conditions can do to a currency . $30 dollars US would currently get you over $100 trillion Zimbabwean dollars , so in effect it is virtually worthless as a currency .
Types of Forex Financial Instruments
Lets take a quick over view of the different kinds of financial instruments (trading systems) in the FOREX market.
Spot
In this kind of trade, the transaction has a 2-day delivery date. This is a direct exchange between two currencies and often involves cash and does not include any interest. This is by far the most voluminous trade that is carried out in the forex market.
Forward
In this kind of trade, currencies are exchanged on a future, agreed upon date. The seller and the buyer agree upon a future date on which to exchange their currencies with each other. The currency is then exchanged at the rate of exchange prevalent on that day.
Future
This is similar to the Futures trade which takes place in the stock market. This involves standard contracts which often have maturity dates. The contract will state how much currency is to be exchanged on which date and at which rate. There are often special exchanges for these trades. The contracts also often include interest costs.
Swap
This is a very unique type of a forex transaction. In this, two parties decide to exchange currencies with each other for a pre-agreed length of time and then agree to reverse the transaction at a future date.
Option
This again is similar to the Options trade in the stock market. In this transaction, the owner of the transaction can exchange currency at a pre-agreed rate on a pre-agreed date. This is an option, a right, but not an obligation of the Option owner.
So we can see that The Forex Market is a essential part of the world economy , generating wealth around the world. Now even someone with no knowledge of FOREX or trading can make a serious income . Forex robots are fully automated they buy and sell with the absolute minimum of risk . Discover how you could make $30,000.00 in 90 Days with a FOREX trading robot .
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