WHAT IS FOREX AND WHAT DO PEOPLE USE IT FOR?

Forex is the abbreviation of the English words of Foreign Exchange Market. Forex is the currency market where all the world currencies are traded. The foreign exchange market is the financial market with the highest volume of daily transactions, and it has a daily average of transactions exceeding 3.2 trillion dollars. 

This figure is equivalent to an amount that triples the average daily trading volume of the US stock market and the US public securities market as a whole.

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The forex market has unique characteristics compared to other financial markets, since it does not have a centralized location or physical location. Forex is a market consisting of a computerized electronic network that allows banks, financial institutions, investment funds, companies, and private investors, among other economic agents, to buy and sell currencies. That is why Forex has no time limits and operates 24 hours a day next to the main global financial centers. Initially, the only way for a private investor to operate in forex was through the intermediation of a bank, an entity that was responsible for conducting transactions by the investor.


However, since 1971, when the free exchange rate flotation began and the gold standard was abandoned, currency trading was revolutionized. Currently besides importing and exporting companies, there is a great variety of participants in the forex market. Among the new participants we find investment funds, risk managers, speculators and even private investors. Each particular group has its own objectives for which to invest in forex. For example, we find a mere need to pay bills in foreign currencies for goods and services, up to speculative and investment objectives.

By definition, a transaction in forex implies a purchase-sale of two currencies simultaneously with the price determined in the market, called a quote. For example, the currency used in the Euro Zone is the euro, while in the United States, the currency of legal tender is the US dollar. So when an investor buys the EUR / USD pair he is actually buying euros and selling US dollars at the same time to acquire the euros. This operation in technical terms is defined as “placing a long position” with respect to the EUR / USD pair cited in the example.
To be able to invest in forex you must resort to a broker. You should also determine with what currency pair you want to invest.

The choice you make, I would have to make based on your knowledge. Brokers generally do not make suggestions regarding the currency pair to operate, they simply limit themselves to executing their orders.

To earn money in forex, you have the possibility of placing long positions and / or placing short positions. When you open a long position, you would be buying a currency and expect to sell it when the same currency reaches a higher value, thus making money between the difference between the sale and the purchase. In summary, it waits for the base currency in question to appreciate.

Conversely, by placing a short position, you would be selling a currency in order to buy it back later at a lower value. Wait for the base currency to depreciate. This is one of the main attractions of the forex market, since it can make money with both a bull market and bullish. As long as you have the ability to predict the direction of the market and the currency pair in question, you can position yourself in such a way to always earn money, and this is clear, no matter what direction the market takes.