How FOREX works?

As we know Forex is foreign exchange. Not unlike this, it is all about exchanging foreign currencies with one another. Let’s simplify it with an example.

                You must be well aware of MONEY BXCHANGE. This is a micro level example of Forex. It is part and parcel of today’s social market. There are many people going to foreign countries and earn foreign currencies. They send their earnings to home country in the form of foreign currency and in this way their relatives are to face trouble. As they need their home currency to shop in the market. This problem is well solved by money exchange. There, you can sell the foreign currency and get the home currency. The money exchanger also gets profit from you for doing two simple things;

1.       Buys foreign currency from you

2.       Sells local currency to you

In a very likely manner, if a tourist comes to our country he will be having the currency of his own country but he needs our currency say PKR to shop at Pakistan and pay for services he gets. For this he sells his currency to the money exchanger and buys our currency then. This increases the worth of our currency. Here you get a very important point I.e. buying a currency will increase its worth.

                                Forex is just like this a very huge international business of foreign exchange. It is much enormous as compared to local markets. In local business there is more investment and less profit while in Forex there is less investment and much more profit. Actually in local business rates vary on daily basis but in Forex rates vary on per second basis due to it being an international business involving hundred thousands of people and millions of transactions processed.

                A big point in Forex is that here you can also trade in Gold, Silver and crude oil.

Now we come up with introduction to the components of forex .