What Is Forex?
The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate.
The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of August 2012, the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.)
One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.
Spot Market and the Forwards and Futures Markets
There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on. In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of time. However, with the advent of electronic trading, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators. When people refer to the forex market, they usually are referring to the spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out to a specific date in the future.
What is the spot market?
More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement.
What are the forwards and futures markets?
Unlike the spot market, the forwards and futures markets do not trade actual currencies. Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and a future date for settlement.
In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.
In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement.
Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well. (For a more in-depth introduction to futures, see Futures Fundamentals.)
Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous and all refer to the forex market.
Read more: Forex Tutorial: What is Forex Trading? https://www.investopedia.com/university/forexmarket/forex1.asp#ixzz525bWN7J6
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Aspiring Entrepreneur? 3 Tips for Starting Your Own Business
There’s a certain allure to the idea of starting your own business. You’ll be your own boss, you’ll have full control of whether you succeed or fail, and your potential income is theoretically unlimited. Of course, the dream of being a business owner fades away for many as they deal with the everyday grind of running a company and trying to get it off the ground. Knowing how to start a business is key, and here are three tips that will help you make those business dreams a reality.Start with a Strong Business Plan
Most would-be business owners have some ideas, but they never really flesh those ideas out. Instead, one day they leap headfirst into turning one of those ideas into a business. While having initiative is good, you’re not going to succeed if you only have a faint outline of what your business is about.Don’t be one of the many people who skip the business plan stage. Your business plan is where you go over everything about your business and how it will work from the fundamentals to the small details. A business plan is a multi-page document that covers what your business will offer, what makes your business different from its competition (also known as its unique selling proposition or USP), competitor research, expected startup costs and your marketing plans, to name just a few sections.
You could put together a business plan over the course of about a weekend, but don’t rush it. Spending more time on your business plan will give you a much better shot at success.
Choose the Right Digital Marketing Methods
You could have a spectacular product idea that appeals to all kinds of people, but it wouldn’t matter without good marketing. This is one area where many startups fail, as they can’t get people to check them out. With how often people are on their computers and smartphones, digital marketing has quickly become the premier way to market a business.There are plenty of digital marketing methods out there, and you’ll need to decide which ones work best for your business and fit your target audience. If you’re targeting people looking for certain products online, you may have success with pay-per-click (PPC) search engine ads. Social media ads can be a good way to target a specific audience. If you’re targeting teens or young adults, influencer marketing can often be the best marketing method to reach them and leave a lasting impression.
Spread Positive Word of Mouth about Your Business
As you start getting customers, it’s important to build on each sale, and you do that through positive word of mouth. Of course, this all starts with doing a good job and satisfying those customers. You should follow up with customers to see if they were satisfied with your business. That’s also a good opportunity to ask them to leave a review. To sweeten the deal, you can offer them something for leaving a review, such as a discount code. Take those reviews and post them online, like this Xyngular review page, and let potential customers learn more about what you can do for them.Once you have positive reviews, make sure to showcase them online. You can do this on your company’s website by including your company’s star rating on a review site, such as Yelp, along with a link to those reviews. Another option is putting reviews from satisfied customers on your company’s site or social media account.
If you’re willing to work hard and be smart about what you’re doing, you can gradually build your business to higher levels of success. Use the three tips above any time you’re starting a business to help it take off.
