What is Forex Market?

The foreign exchange market (sometimes referred to simply as the "forex market") is the place where you can exchange (buy and sell) different currencies such as yen and dollars.

There are various events in the world that require the exchange of different currencies. For example, there are cases where the yen is exchanged for foreign currency at a bank when going abroad, and the importing company procures foreign currency in consideration of the yen for payment overseas, or domestic investors procure foreign currency. There are also cases where the yen is exchanged for foreign currency when buying or selling denominated financial assets. To meet these various needs, there is a foreign exchange market as a place to exchange (buy and sell) currencies of each country.

However, the term "market" does not refer to a specific place or building like a fish market or a vegetable market but is an abstract concept that indicates the entire transaction that takes place within a specific framework, and many of them. Transactions are made through telephones and electronic devices.

Foreign exchange market transactions are
(1) transactions conducted by individuals and companies with financial institutions (called "customer transactions" from the perspective of financial institutions) and
(2) transactions conducted directly between financial institutions or through foreign exchange brokers. It can be broadly divided into two types (called "interbank transactions" in the foreign exchange market).

What kind of transaction is forex trading?

A "foreign exchange transaction" is a transaction that exchanges two different currencies (such as the US dollar and the Japanese yen).

The ratio when exchanging currencies with each other is called the exchange rate, and it fluctuates due to various factors such as the political and economic conditions of each country, but it is determined only by comparing the two countries.

Generally, in forex trading, if you think that the value of the US dollar will increase in the future, you will buy the US dollar, and conversely, if you think that the value of the US dollar will decrease, you will sell the US dollar. If you buy US dollars at 100 yen per US dollar and sell them at 120 yen, you will get a foreign exchange gain of 20 yen. On the other hand, if the yen strengthens to 80 yen, a loss of 20 yen will occur.

 

In foreign exchange transactions, information such as policy meetings, economic conditions, and economic indicators that cause exchange fluctuations is indispensable. Please use Neuron Market to collect information related to FX.