A Way Of Winnig Huge Profits

A Way Of Winnig Huge Profits

A way of​ winnig huge profits.
A way of​ winnig huge profits.
Currency exchange is​ the trading of​ one currency against another .​
Professionals refer to​ this as​ foreign exchange, but may also use the acronyms Forex or​ FX .​
Currency exchange is​ necessary in​ numerous circumstances .​
Consumers typically come into contact with currency exchange when they travel .​
They go to​ a​ bank or​ currency exchange bureau to​ convert their home currency into , the currency of​ the country they intend to​ travel to .​
They may also purchase goods in​ a​ foreign country or​ via the Internet with their credit card, in​ which case they will find that the amount they paid in​ the foreign currency will have been converted to​ their home currency on their credit card statement .​
Although each such currency exchange is​ a​ relatively small transaction, the aggregate of​ all such transactions is​ significant .​
Businesses typically have to​ convert currencies when they conduct business outside their home country .​
They exportin goods to​ another country and receive payment in​ the currency of​ that foreign country, then the payment must often be converted back to​ the home currency .​
Similarly, if​ they have to​ import goods or​ services, then businesses will often have to​ pay in​ a​ foreign currency, requiring them to​ first convert their home currency into the foreign currency .​
Large companies convert huge amounts of​ currency each year .​
The timing of​ when they convert can have a​ large affect on their balance sheet and bottom line.Investors and speculators require currency exchange whenever they trade in​ any foreign investment, be that equities, bonds, bank deposits, or​ real estate .​
Investors and speculators also trade currencies directly in​ order to​ benefit from movements in​ the currency exchange markets .​
Commercial and Investment Banks trade currencies as​ a​ service for their commercial banking, deposit and lending customers .​
These institutions also generally participate in​ the currency market for hedging and proprietary trading purposes.
Governments and central banks trade currencies to​ improve trading conditions or​ to​ intervene in​ an​ attempt to​ adjust economic or​ financial imbalances .​
Although they do not trade for speculative reasons --- they are a​ non-profit organization --- they often tend to​ be profitable, since they generally trade on a​ long-term basis .​
Currency exchange rates are determined by the currency exchange market.A currency exchange rate is​ typically given as​ a​ pair consisting of​ a​ bid price and an​ ask price .​
The ask price applies when buying a​ currency pair and represents what has to​ be paid in​ the quote currency to​ obtain one unit of​ the base currency .​
The bid price applies when selling and represents what will be obtained in​ the quote currency when selling one unit of​ the base currency .​
The bid price is​ always lower than the ask price .​
Buying the currency pair implies buying the first, base currency and selling (short) an​ equivalent amount of​ the second, quote currency (to pay for the base currency) .​
(It is​ not necessary for the trader to​ own the quote currency prior to​ selling, as​ it​ is​ sold short.)
A speculator buys a​ currency pair, if​ she believes the base currency will go up relative to​ the quote currency, or​ equivalently that the corresponding exchange rate will go up .​
Selling the currency pair implies selling the first, base currency (short), and buying the second, quote currency.
a​ speculator sells a​ currency pair, if​ she believes the base currency will go down relative to​ the quote currency, or​ equivalently, that the quote currency will go up relative to​ the base currency .​
After buying a​ currency pair, the trader will have an​ open position in​ the currency pair.
Right after such a​ transaction, the value of​ the position will be close to​ zero, because the value of​ the base currency is​ more or​ less equal to​ the value of​ the equivalent amount of​ the quote currency .​
In fact, the value will be slightly negative, because of​ the spread involved .​
For more information contact Currency Traders at​ www.mynetto.com

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