FxMAC is offering Forex reviews in order investors have a wider idea of what the Forex Market works and, we are going to offer a serie of chosen videos about Forex Managed accounts reviews.
This video is a very basic introduction to the Foreign Exchange Market (Forex).
Every day Euros are being exchange for Dollars, Dollars for Yens and Yens for Euros. This represents part of the exchanges done on the market called Foreign Exchange Market.
To tell you this Market is organized how it change rates between the different currencies set. This is the Exchange Market explained in plain English.
John and Mary are going to spend the weekend in London, they estimated the amount of expenses at 300 Euros.
As Great Britain is not part of the Eurozone, they have to buy British pounds.
They go to the bank to exchange 300 Euros for British pounds. At the times of the transaction one euro is 0.8 661 pounds. John and Mary will get 259.83 pound for the 300 Euros.
This money transaction took place on the front Exchange Market.
Behind this transaction there is Peter. Peter works as scrooge bank as a trader.
Every day, he gets British pound buying requests and Euro buying requests. As for all goods price, here the exchange rate of currency is set by supply and demand. As the request of British Pounds goes up against euros and a balance is created and if the British pound exchange rate increases, the British Pound will get stronger compared to the euro.
Watch out tourists are not the only actors on the Foreign Exchange Market. God and services companies, States, investors and even speculators, act on the Forex Exchange.
This is not the only item affecting to the currency rate. Other items also take place to work out currency rates, as currency interest rates, also the political situation of countries, the economic indicators, such as the gross domestic products, inflation rate, Etc.
Be careful this is only true in a floating rate system
To summarize the Forex Exchange Market is made up by the scent of by sales and Loan burrow transactions in currencies.
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