Forex is the international money market dealing among banks. By the way this market is everywhere and nowhere. The banks of different countries (and some big financial structures, let us call them all as the operators of the market) sell the currency of different countries among each other. But the sum quality of these operations is enormous; it extends three million USA dollars per day! That what Forex is! Forex reminds Internet – no one possesses him and no one can rule him.
The rates of exchange all the time change flow under the influence of different factors. The speculative receiving of profit when trading on the money market is based on it. Let’s discuss it more closely.
In modern countries everybody either sell or try to engage in trading. And to understand better the essence of the exchange trade and its advantages let us compare it with the usual “goods” trade. While doing usual trade you normally buy goods on your own or taken in credit money, put it there where it costs more expensive and there you sell it. Very often the goods are not being moved and the trader is waiting for some time till the price of the goods not grows up substantially and then he sells it. The formula of this looks as follows: money * goods *money + profit – costs.
The advantage of this business is the possibility to get the high standard of profit till 100%(when you have a successful choice of the goods). But with the trade development in the country it is getting more difficult to find goods which give such a profit, the competition is growing, the market becomes “overwhelmed with goods”. Besides many goods have the fixed expiring data that is they are subject to spoiling and other risks. The costs on goods transportation even inside the country are very high, in spite of everything a lot of organizing issues must be solved here. And the fee rent, a lot of expenses to state and not state structures, the wages of the stuff - all these considerably reduces the profit. You may not guess right the goods and you will have to sell him for the price lower than you bought it.
To increase profit there are only two ways - to get a credit and to increase the quantity of the goods (or the range) or to hurry the circulation of the goods selling it is practically on prime cost. For the credit you should pay a very high percentage and in case you lose the goods - you may lose everything that used to be the credit guarantee. As a credit the average shop to manage which you need almost 20 000 USA dollars at best brings the owner 1 000 USA dollars per month and constant business.
Before you decide to make a forex investment or start forex trading yourself, better find a nice forex book and read more about the currency exchange market - this will save you from tons of troubles and traps.
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