The FOREX (Foreign Exchange) market is one of the biggest markets in the world. No other market can match the amount of revenue that this market generates in a day as it is almost equivalent to 4 trillion dollars. Now that’s an amount which is so big that almost 90 % of the countries in the world do not have an economy that can produce such an amount of money. Thus, this market has tremendous potential and many people who are active in FOREX market trading earn a lot of money every month through successful buying and selling of currencies.
The different institutes that take part in this trade include governments, banks, MNCs, investors and other financial institutions. The trade is centered on financing and export import. For example, when a country goes to the World Bank seeking a loan, the loan amount is then offered in what is called as the ‘global trade currency’ the US dollar, then this money is converted into the currency of that country, This particular transaction will not only benefit the US treasury but also the investors who had invested their money on the US dollar.
The demand of a currency is the main factor which determines the exchange rate of a currency and the other important factor is the economy of the country. Like during the recession period, the value of the US dollar decreased dramatically as the economy of the country was not doing so well.
FOREX market trading benefits the government of various countries, the central banks, companies involved in import and export, investors, different financial institutions and common people who are involved with this line of business.
How can we benefit from FOREX market trading?
FOREX market is very similar to the stock market and so people can invest in it. To explain it in a layman’s term, common people like us can approach brokers and buy certain amount of a currency and then we can sell that amount. At the time of selling this currency, if its value increases we make a profit and if it decreases we will incur a loss. This process of buying and selling happens 24 hours a day; the brokers or financial advisers keep a track of the market and can predict which currency which show an increase in its price. Based on their predictions, we can invest our money on that currency and then sell it off to make a profit.