There
are three basic elements in the foreign exchange market (Forex), which should
be known by the trader. These three elements are included in a trading system
which is one of the main tools that should be owned by every trader. After the
system was created, the trader must know the system is working, recognize the
symptoms of faults and weaknesses of the trading system, as well as optimism
that the system will work fine creations. Therefore, understand three important
elements in the Forex market before completing a system.
These
three elements are:
1. Elements Geographic
You
must know that Forex is one of the world's largest market and the largest in
the world. He is always open 24 hours non-stop. Therefore, no matter whether
you are the people of Indonesia, Japan, America, Singapore or the Forex market
will continue to reach all the traders in the world at any time and at any
time.
Most
of the major exchanges is in Singapore, Hong Kong, Tokyo, Bahrain, London, New
York, San Francisco and Sydney. Forex market is the geographical element that
can help new traders realize how much trading going on around the world.
2. Functional Elements
Forex
basic function is not to exchange currencies worldwide. When trading occurs,
the countries that partner will convert their revenue from foreign currencies
into their domestic currency. So that it is possible when the purchasing power
of the countries strengthened, the purchasing power of other countries might
weaken. Forex trading can be said to be very helpful in the trade of goods
between countries, as well as the provision of financial credit.
3. Elements of Participants
Globally
two users Forex:
a.
Bank (usually referred to as the wholesale market)
b.
Client or individual traders (usually referred to as the retail market)
In
these two categories, there are five types of participants. The first type is
the bank and non-bank. For the type of non-bank typically consists of large
brokers as fulfillment partners of funds from the client to the market. While
the second type consists of individuals, commercial enterprises, and other investments.
The group consists of importers, exporters, tourists, and investors or traders.
They often use the Forex market in order to increase investment. The second
group often use Forex to protect their values and assets, in anticipation of
reducing the risk of loss.
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Investors
themselves subdivided into types speculators and arbitration. These people take
advantage of the market to make money for themselves. They make money on Forex
for themselves and act according to their wishes. It can be said that these two
types of investors are likely to make a profit from the movement of currency
exchange rates. Sometimes the big banks get into this group.
Another
group, which also falls into the Forex is the central bank. The central bank
has the power to change the value of the currency, or at least try to change.
Every action of changing currency values the central bank is done with a
specific purpose. Unlike investors, central banks in each country aim to
influence the market, so that the value of the domestic currency of their
country awake and provide benefits to the state. So it is not harmed both
exporters and importers.
Forex
brokers are the last group of participants in Forex trading. They are the party
that facilitates trading, but does not act as a partner investor or trader in
the transaction. Generally, they charge a fee for services rendered, in the
form of commission.
Source:
earnforex.com
Source:
earnforex.com
