The forex market that in English is known as “Foreign Exchange”, is one that specializes in the exchange of currencies between investors from all over the world. This type of investment consists of buying and selling foreign currencies, obtaining a favorable differential between them. The forex market represents a good source of income for those who wish to venture into it.
The Forex currency market is one of the largest and most liquid financial markets in the world, with more than 2.5 trillion dollars traded every day, well above the daily negotiations of all the bond and stock markets that exist. Allowing investors from around the world to buy and sell currencies, through the exchange between suppliers and applicants of the same.
The participants in this market are the central banks of the countries, commercial banks, institutional investors, private investors and companies; Therefore, despite being a very large market, where the world's most colossal institutions participate, small investors can also operate.
In order to understand what the forex market consists of, you must take into account what happens in the market. The market is a place where goods and services are traded, therefore the same thing that happens in a market for everyday goods and products, happens in the forex. In the forex, the goods that are traded are the currencies of different countries (euros, dollars, yen, etc.) for example, an investor could sell dollars for euros. What you do is trade one currency for another.
Depending on the moment in which the exchange originates, two types of foreign exchange purchase and sale operations can be originated: spot (spot), or term (forward).
Forex spot (spot) is a forex trading operation, where the two market agents immediately exchange two monetary flows in different currencies.
Forward Forex is a currency purchase and sale operation, in which the two market agents reach an agreement to exchange two monetary flows in different currencies at a future date, after the spot date; in other words, the two agents undertake to comply at the expiration of the operation.
