Forex Trading is an Online Currency Buying and Selling.
You must have heard the term forex (forex trading). Forex = the exchange rate of a domestic currency with a currency from another country. Currency exchange rates become a benchmark for units between the value of one per one currency and another.
If you are an agent on the stock market, you must be wondering how big this online forex trading market is. In a data from IBS, the circulation of money on the New York Stock Exchange is only around $ 2 billion per day. While the turnover in the forex trading market is three times that, even more so. It’s really a market with very large trading volumes right?
The answer is very simple, money. The money traded in the forex trading market uses a pairing scheme. It means that currency A is exchanged for value in currency B or currency C. You must have heard the terms EUR / USD (1 euro = a few dollars) and others.
Examples of trading in a barter system.
When Australia needs a product in the form of wheat and intends to import wheat from the US and exchange it for salt. Then the value of one bag of wheat is not equal to the value of one bag of salt. Herein lies the complexity of the trading process using the barter system, which is determining the value of 1 product with other products.
Current Forex Trading Market.
Back to the present, where all transactions use currencies. Although sometimes it is considered unfair because the exchange rate of currency A is greater than the exchange rate of currency B. It is precisely there that lies the excess of the emergence of the forex trading market. Each exchange rate of a particular currency is traded transparently according to the demand and supply of that currency.
Unlike buying and selling in traditional markets that aim to meet needs. Apart from being a necessity for certain parties as a means of payment, the currency in the forex trading market is also one of the investment products. When someone sees that the economy of country A will improve, then he will buy a currency A.
The world’s largest and most unique online forex trading market.
The online forex market is not only the largest market in the world, but also the most unique market. Why ? Because this market does not have the same physical as other markets.
In the past in the late 1990s, the forex market only contained commercial banks and financial institutions / institutions that had large funds. In addition, the capital needed to participate in transactions on the forex trading market reaches millions of US dollars.
However, now after technological advancements and the emergence of internet connections, the online forex market has become more transparent and liquid. Anyone can participate in transactions with capital that is not too large.