Importance of the foreign exchange market in the economy

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If there is a financial asset of special importance in the economy, it is the foreign exchange market. At some point you have heard of it and it may have even served to make your economic operations profitable. For many years it has become a benchmark for establish business relationships, no solo de todos los países del planeta, sino además entre las persons. Es por esto que es muy importante que tengas un conocimiento pleno de lo que significa en las relaciones económicas.

If we talk about the foreign exchange market, we necessarily mean the Forex. It is an abbreviation of the English term Foreign Exchange and it happens to be one of the most active markets in the world and is characterized by being strongly decentralized. Well, all kinds of foreign currencies or international currencies are traded in it. Not only the best known, such as the euro, the US dollar, the Swiss franc or the British pound, among some of the most relevant. But others from any international economic sphere.

Through this very special financial market, the currencies they trade at all hours y sufren toda una serie de cambios en sus valoraciones. Estos movimientos son utilizados por los inversores para intentar rentabilizar su capital disponible. No es de extrañar que be uno de los mercados más activos del mundo debido a que se puede invertir en casi cualquier divisa del mundo. Donde la alta volatilidad de sus precios es uno de sus principales denominadores comunes. Hasta el punto de poder abrir y cerrar posiciones en una sola sesión en los mercados de renta variable. Con una amplia diferencia entre las prestaciones y las discapacidades que puedes obtener a partir de ahora.

Currency: monetary flows

De todos modos, su aparición se debe a un motivo muy concreto y que tiene mucho que ver con lo que son las relaciones económicas. En este aspecto, no se puede olvidar que este mercado nació con un target muy claro y que no es otro que facilitar el flujo derivado del comercio internacional. Todo se compra y se vende a través de moneda, sea la que sea. En la medida en que es lo que da valor a las operaciones que se realizan en todo el planeta. Con un link muy directo sobre cuál es el precio del dinero. No es sorprendente que las políticas monetarias se basen en los resultados ofrecidos por los mercados de divisas.

On the other hand, it cannot be forgotten that currencies are the instrument for designing the economic policy of a country. Beyond other vital economic valuations. Where a good part of the international operations are carried out in very specific currencies. As an example, in the specific case of euro and dollar from United States. This is why the changes that occur in the markets where they are listed are so important. To the point that they can unleash a major financial storm, as has happened in recent decades. Or even cause particularly important economic recessions.

Currency trading

Tal es la relevance de este importante activo financiero que es completamente imprescindible para realizar cualquier actividad comercial. Hasta el punto de que según el Bank of international agreementsPreliminary global results from the 2016 Triennial Banking Market Currency and Derivatives Survey show that trading in currency markets averaged around $ 5 trillion in this period. This is a figure that highlights the importance of currencies in capital flows around the world.

For this procedure to be carried out correctly, the coins must be regulated to determine their value. And in this sense, it is the financial markets that exercise intermediaries depending on the law of supply and demand at each specific moment. With constant variations in their prices and their prices, small and medium investors can take advantage of each of their operations in these very special markets.

What are these markets like?

The financial markets where these assets are listed are very similar to those of other investments. As an example, buying and selling shares in a bag. But with a small nuance that you have to take into account from now on. It is none other than its variation is continuous, which can help you carry out your commercial operations. You can earn a lot of money on these signature moves, but for the same reason, leave a lot of euros on the road. At no time should you forget the risk involved in your operations. Above other more conventional investment classes.

Based on this general scenario, it is very important that you know that it is of great relevance to adjust the purchase and sale prices of currencies. Among other reasons due to the fact that it is very tight operations. Another of the most relevant characteristics of this financial market is the presence of its high volatility, which is an impediment to operating with greater tranquility in these investment proposals. On the other hand, it is an investment that is recommended for very short periods of time. Even within hours it can satisfy your investment needs in this particular financial asset.

More than barter operations

Currencies, on the other hand, go beyond what is detected in the investment markets. Because in effect, if they are characterized by something, it is because if the exchange market did not really exist, international transactions would be like a simple exchange of products and there would be independence from the exchange market. domestic prices of a country as for the internationals. This, however, adds greater relevance to the effects from which your actions are derived. Although it is true that only a few are those that concentrate most of the operations carried out in countries around the world.

In this sense, the most important role corresponds to the US currency. Until recently it monopolized the majority of commercial and mercantile transactions. Until the European common currency, the euro, and these functions have been distributed almost equally. This is one of the main reasons why currency markets are the protagonists of a large part of the operations carried out by small and medium investors. Not surprisingly, a good part of the financial agents are pending at each of the moments of their respective changes in the price.

Forex market functions

Another aspect to explain at this time is the role in this type of financial markets. Well, its functions are very well defined and you need to assimilate this concept from now on. Because in fact, l forex market alcanza dos funciones principales en su misión. Uno de ellos reside en convertir la moneda de un país en la moneda de otro. Este concepto se comprende fácilmente en cualquier strategy monetarista. Pero por otra parte, la segunda de sus funciones se basa en ofrecer un poco de seguridad ante el riesgo cambiario que implica este tipo de operaciones tan especiales. De alguna manera genera una especie de motion protection that are developed in financial markets of these characteristics.

Because as you well know, the risk of these movements is greater than in other financial assets with which you are used to trading every day. And that you demand something security measures higher to preserve over all its positions. To the point that not all investors are in a position to operate with these investment instruments. If you do not have enough financial culture to operate, it will be better to abstain and direct your personal assets to another class of financial assets less complex in terms of their structure and mechanics in the financial markets.

Crypto arrival

One of the most relevant events in recent months has been the landing of virtual currencies. But be very careful with your operations because at the end of the day it is not the same even when they are denominated as currencies. It is something totally different that has nothing to do with the subject we are dealing with. But on the contrary, it delves deeper into what is an investment in a clearly alternative and fundamentally risky way. Due to the effects derived from its operations, as can be seen during these days.

These virtual currencies can revalue almost to 100% as soon as the next day they will be in the markets with an equivalent percentage or even with greater intensity. With the obvious risk of leaving you in the markets a very important part of the invested savings. From this scenario, virtual currencies cannot be compared, for example, to the Swiss franc, the British pound, or the Japanese yen itself. It is a totally different financial asset. This is something that you have to take into account now to correct any strange movements in your checking account. Something that some small and medium investors around the world are accusing.