FOREX: For the Expert?
FOREX: For the Expert?
Would you agree that the value of ythe money in your pocket does not represent the value printed on it? Especially now that we claim to live in a global community thus the yen could not be equal to a dollar on a one-to-one ratio. Although, one could claim that both these currencies the yen and the dollar could probably purchase small items in their respective countries. However, when they switch places could yen buy in the same capacity as the dollar?
This is where the so-called FX or Foreign Exchange Market enters the picture. Why trade currencies in the first place? As mentioned earlier, forex is needed in trade - especially in terms of imports and exports.
Forex does not only facilitate the flow of goods but dictates the value of one currency against another. Thus, it became more of an investment when one holds a dollar and waits for the time of its appreciation or depreciation before making transactions. Obviously, this is from a micro-forex perspective or that of a retailer.
However, when we widen the scope, FOREX is more than mere trading. It now involves large financial and monetary institutions such as banks, stock-exchange market, governments and other financing institutions. Having involved these establishments, it only connotes that the FOREX market has massive trading volume, which doesn't literally mean money per se but maybe in terms of products or goods.
Furthermore, most of this could be assumed to be liquid or easily converted into cash. Definitely a lot of people are working behind or with it. It would seem that it should be possible to have a melting pot in a FOREX market. Actually since it's a melting pot, one could infer that geographical location plays a crucial role not only affecting space but also time.
Forex is said to be an around-the-clock affair or popularly quoted as 24/7. Lastly, considering these things it is also probable that there could be other parameters that could affect it.
Well, we will not be dealing with FOREX in its humongous sense. We'll break it down into pieces. What we need is to follow Scott Owens' "The Six Forces of Forex," which basically post these inquiries: (1) Who and (2) Why trade forex? (3) Where, (4)What and (5) How should you exchange for such?
By the way are you good in logic and analysis? How about in assessing or predicting outcomes? Well, although it is not required it would be definitely of great aid.