Business, Investing, Making Money

The Complete Guide To Forex (9 of 10)

FOREX Foreign Currency Spread Graphic

The Basic Trade

A share is a holding of a company that varies in value based on the desire or need for that particular company’s goods or services. As a shareholder, your net worth increases and decreases based on taking a short position when values are high and a long position when prices are low.

As long as the stock or security is in your possession, the change in value is considered unrealized gain or loss because you cannot measure it in liquid assets.

When most commodities traded on the market are on a strong upward trend for a period of time, this is referred to as a bull market. Should value take a sharp downward swing and continue on that path, it is called a bear market. If no such trend is recognized, and the value of stocks and securities is fairly even, this is referred to as flat.

The Foreign Exchange Market

The Foreign Exchange Market is the stock exchange on which several different countries across several different time zones trade their domestic and international commodities in various currencies. Currency is the denomination or monetary division used in a particular land.

When multiple currencies are in use, they are typically expressed as a ratio called a cross-rate that shows the amount of a second currency that is equivalent to the first listed. Determining what the equivalent is would be referred to as currency conversion.

Several countries in Europe, which have now consolidated their currencies to agree on the Euro trade on Forex, as it is called for short. Britain, which to this point has opted to continue using the pound sterling, also takes part in international trade, as well as the United States, Japan, and Australia.

Each of these countries utilizes its own currency for standard trading purposes, with options for investment in foreign currencies.

Determining whether or not this is worthwhile depends on the currency conversion rate.

The value of a nation’s currency is determined by its government and the federal reserve bank. Interest rate of conversion by a government is referred to as valuation/devaluation is taking value and strength from the currency, and revaluation adds strength and purchase power to the currency.

If the same change to the rate of conversion occurs naturally through events and the volatility of the market, it is then called appreciation and depreciation.

The Complete Guide To Forex (10 of 10) – https://www.mastersofmoney.com/thecompleteguidetoforex10of10/

Risk disclosure: *All investments involve risk. Before making any financial or investment decisions, we highly advise that you seek the advice of a properly licensed and trained investment professional.

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