Welcome to Forex

Is an average citizen really able to work in the Forex market? Or is it just a tempting advertisement and scam? To begin work and earn in Forex market, it is necessary to get an idea of the functions it performs.

Thus, companies operating in the international market, have to constantly exchange currency in the process of transactions. Rate of such exchange is a market one. Therefore, Forex is an assistant in the transactions of the exchange.

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Structure of Forex market

Forex-Market

1. Active participants are called market makers. With the participation of market makers, pricing is conducted. This category of participants submits proposals of their own prices creating demand and supply. Trading of these participants is multimillion. Therefore, central bank and brokers are active participants. This category includes commercial banks as well.

2. Passive participants are not involved in the pricing. They take part in transactions established by the first type of participants. Passive group includes investment funds, export and import companies, international corporations, and private investors. In addition, there are also dealing centers that conduct passive activities.

Dealing centers help private investors the most. These centers provide assistance to those, who conduct operations. Moreover, dealing center provides assistance even to those whose capital is not large.

For any investor, the minimum standard lot is about 100 thousand dollars. Not every potential investor has this sum of money. However, dealing center can rely on these members. Dealing centers provide margin trading offering loans. In other words, it is a profit trading.

The loan amount may reach $100,000 if a party has $1,000. In this case, leverage 1:100. In other words, leverage represents ratio of a party’s deposit to the loan amount. In general, leverage amount can be expressed in different ratios and depends on the amount of the investor’ s contribution. Ratio of transaction profits and risks are in direct proportion. With the increase in profit, risks also increase.

Forex-Markets
FX-Market

A party risks its own money. The loan amount will have to be repaid to the credit organization. Therefore, it controls all the transactions. If a participant starts losing market, i.e., purchased currency’s value falls, a creditor is eligible to close the deal in force. These steps will help avoid loss of credit funds.

Under this scheme, work is organized in Forex market. The market’s structure is maintained by its automatic balance of supply and demand as well as new stakeholders. It helps market not only be an effective way of money making, but also manage larger volumes of trade and new traders.

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