What is this thing called Forex

First and foremost, it is the aggregate of all major transactions for buying/selling currencies and exchanging the monetary units of one country for the monetary units of other countries. The word "Forex" appeared from the initial parts of the phrase FOReign EXchange Market. The market emerged as a result of a decision by the ministers of countries that are members of the International Monetary Fund on an agreement for freely floating national currency exchange rates.

What makes Forex so attractive for investment? There are several reasons, two of which stand out. The first, and perhaps the most important, is recognizing currency as a commodity. Moreover, currency is a commodity that everyone constantly needs. For example, an American company that buys Japanese sneakers for its athletes must pay Japan in yen. The Japanese themselves vitally need the euro, with which they can pay France for fine wines. Thus, this example makes it clear that at any given moment any country needs any currency, only in different amounts, and that already fades into the background. The second reason is the constant need for other countries’ currencies. As in any market, the forex market is governed by the law of supply and demand. Supply and demand for a currency are constantly changing, and therefore the exchange rate does not remain at the same level. In addition to the influence of supply and demand on exchange rates, currencies are also affected by various external factors such as labor productivity, unemployment, the economic situation in a given country, and inflation.

People make money in the forex market through trading. Profits here are made on the difference in exchange rates. What is a currency pair rate? It is the value of one currency expressed in another. For example, if the EUR/USD pair is trading at 1.547, that means one euro is being offered for 1 dollar and 547 cents.

A quote always contains only two prices. The ask is what they call the buy price, which is always on the right, and the bid is the sell price, always on the left. At the price indicated by the bid, you can always sell the currency that stands first in the simple abbreviation. At the price represented by the ask, you can buy by selling a certain amount of the currency that is listed second.

The basic principle of trading here is simple — buy cheaper and sell at a higher price. The only difference from other exchanges is that you can profit from a currency’s decline here.