“…When money flows into a currency, it strengthens, and aback money flows out of a currency, it weakens.”
When we abode a barter in the forex
market, we are affairs one bill and affairs the other. This is why
forex is traded in bill “pairs.” As a beheld example, we can advertence
the angel below.
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| What Are We Trading When We Trade Forex |
If we buy a bill pair, like the
EUR/USD, we are affairs euros and affairs dollars. We abode this barter
aback we accept the EUR/USD barter bulk will acceleration and acquiesce
us to advertise aback our euros for a beyond bulk of dollars at some
point in the future.
But in the forex market, we can
barter the added administration as well. So we could advertise the
EUR/USD, finer affairs euros and affairs dollars. With that trade, we
would appetite the EUR/USD barter bulk to abatement so we can buy aback
the euros for beneath dollars than we originally awash them for.
So not alone do we accept a
ambition of affairs low and after affairs high, we accept the advantage
to advertise aerial first, and again buy low later. There are no
restrictions on abbreviate affairs and we do not charge to own any euros
above-mentioned to affairs the EUR/USD. This is what bodies accredit to
as a “two-way market.”
There are abounding affidavit that
bill barter ante alter 24 hours a day. If you would like to activate
acquirements the ins and outs of what drives this market, analysis out How Fundamentals Move Prices in the FX Market.
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