Forex products are big winners in recent years because they enable private investors or traders to act as institutional investors similar to professionally on the forex markets.
What is Forex?
Generally, the international forex markets, Forex (FX also) be understood. With an average trading volume of more than 3trillion daily foreign exchange markets by far USD markets include the most liquid. As the foreign exchange markets arenot centrally differently organised as e.g. stock markets, there was until a few years ago also no standardized products that could directly be private investors. With the implementation of special Forex contracts, this shortcoming could be now putfiles. Forex contracts themselves are derivative financial instruments, which the development of an underlying (in the case of FXcontracts a certain currency pair) 1:1 is being simulated
The Forex contracts are usually not about classical broker (such as XM opinie) to relate, butbroker that specializes in trading in forex markets. Thanks to the great success of this new asset class the number of Forex brokers increase steadily in recent years, what the terms and conditions for customers will be significantly better. So nowmany of the classic online brokers go to about its offer to expand the category of “Forex”.
In terms of risk profile, it is important to mention that Forex contracts to the leveraged and thus to the high-risk productsare. These products are designed primarily for the clientele of the trader can pursue as their business at a level that is quitesimilar to the of professional or institutional traders. To achieve this high level of Forex brokers provide a special trading software to their clients available, so that trades can be executed in real time. But at a later point more.
The reference rates of the respective currency pairs are usually determined by the respective broker and provided whichoccurs as a so-called market maker in appearance. Although their courses more or less arbitrarily determine marketmakers, the currency rates of the Forex brokers agree fairly closely with the official rates. Characteristics of the Forex As already mentioned the Forex market is the market with the highest liquidity with the sales of more than 3 Trillion. Thisled very early to participate to a speculative motivation to market movements. In this context, carry trades have gainedenormously in importance. These market participants borrow in a currency with low interest rates, to put it then in acurrency with high interest rates. It only then, this Bill may be if not disproportionately appreciates the currency of thecountry with the low interest rates compared to the currency of the country with high interest rates. Because carry trades seem worthwhile only using enormous sums of capital they play virtually no role in the world ofprivate traders.
Here is speculation rather on the concrete development of the course of currency pairs. Major currency pairs In particular EUR-USD and USD-YEN are among the major currency pairs. Alone these two currency pairs make up morethan 40% of the global foreign exchange market. In addition, among others the following currency pairs of crucialimportance are: USD-GBP, USD-AUD, EUR-GBP, EUR-CHF and EUR YEN. Among the traders, who have set their focus on Forex, the EUR / USD currency pair has become also the No. 1 product. Forex contracts The Forex contracts belong to the Group of leveraged financial instruments. The lever is resulting from the fact that tradersin a Forex contract must bring not the total volume by equity capital, but only a small proportion (margin) by an average of1% to 0.25%. A margin of 0.25% is equivalent to a leverage of 400, so bet 1,000 euros 400,000 euros by can be moved. Forthe difference between the traded volume and margin lending rates are levied once held the long position overnight. The amount of borrowing is aimed generally at the EURIBOR plus premium. Interest rates, however, sometimes credited forshort positions. The “Strategies” section discusses the concepts of long and short.