How to make a profit through the currency market
As the different economy has open their doors for the investment ofForeign Investment Institution and Foreign Direct Investment. That means each economy wants to sustain in global market in concern oftheir performance and growth for which there are some parameters, these are dollar reserve ratio, import and export, monetary policy, interest rate, inflation rate all these factors affect the growth of that economy and the value of currency as compare to the other currencies.
As we know that, for any kind of international trade or transaction mode of payment is an international currency i.e, US dollar. Due to the globalization and liberalization currency exchange play a vital role to exchange one currency into another in the global market.
Currency Trading : Currency trading facilitates foreign trade by exchanging one currency into another. Like an equity or commodity trading held on an organized exchange. Forex is also an Exchange or market place where an individual can trade in different currencies or can exchange them.
Forex (foreign exchange market) is a global, decentralized market for the trading in different currencies, which open for 24 hours. In forex different currency pairs are available for trading.In a pair first currency is a base currency and the second currency is the counter currency. When an individual buy or sell this currency pair, that individuals performing that action on base currency. In forex, there are around 39 currency pairs are available. Like the EUR / USD, USD/JPY, GBP/USD here in the above pairs EUR/USD base currency is the EURO and the counter currency USD, that represent the value of the US dollar in Comparison of 1 Euro.
Now we have understood that there are so many factors that we have discussed above that impact the overall performance and growth and individual economy globally apart from that, the other factor like some data's about industrial production, consumer price index, wholesale price index and other that affect the valuation of the currency as compare to others. In international market some index is also available like US Dollar Index that shows the performance of the US Dollar in comparison of another currency. Like may you have heard about the data's related to US Economy like 'Unemployment Claim' or 'jobless claim' that US government provide to US jobless people. If Jobless claim is positive or negative, then it would impact on the US dollar. May be the value of dollars can appreciate or depreciate in comparison of another currency.
As the performance or growth of an economy affects its valuation of currency also. In international market every economy linked with each other in concern of international trade and import and export. Import and export also play a vital role on currency appreciation and depreciation. In international market US Dollar is an international currency, for the import of any kind of the commodity mode of payment is in US dollar.Thus, it is important for each economy to maintain a strong dollar reserve.
For any individual economy if the import is less and export is the high means economy is on growth because that generate a foreign income through which dollar reserve can increase. While being imported is high and export is less that means value of the currency of that individual economy will be less as compared to the other currency.
Like a Forex Trading Tips or in cash, commodity, future and option tips an individual can also receive a recommendation in the currency market. According to his individual risk appetite because, in currency derivative a individual can trade with the minimum investment as compare to the equity, commodity and its derivative.