FOREX is known as Foreign Exchange or FX. Currencies from around the world are exchanged in this global marketplace. The world of forex stands as the decentralized market for the national currencies that are supposed to be exchanged.
For instance, you can swap the PKR to USD or PKR to AED or PKR to Riyal or vice versa.
Forex Exchange Rate or Forex Rate
Foreign Exchange Rate or Forex rate is termed as the known value of the currency of one country put against the value of another currency.
For example, if you conduct an interbank exchange rate of 175.88 Pakistani Rupee to the United States Dollar ( USD), it means that you will be exchanging an amount of 175.88 Pakistani Rupee or PKR for 1 USD, or you can also say that 1 United States Dollar is swapped for 175.88 Pakistani Rupee.
Converting PKR to USD , PKR to Riyal
Converting PKR to USD , PKR to Riyal or PKR to AED helps us to get our forex rate that is being exchanged with respect to the Pakistani Rupee rate and USD rate ( PKR to USD).
The Forex Market:
When we look into the Forex market, it is considered to be the most liquid market in the entire world. Billions and trillions of dollars are exchanged and swapped every single day. Though a centralized location is not specified for this market, it is based on an electronic network of banks joined by brokers, institutions and of course, individual traders.
The foreign exchange or forex market is set to determine the exchange value, which is termed the exchange rate. It can be as simple as getting your currency exchanged at some currency exchange or a local bank. Either this or you can also trade currency at the foreign exchange or forex market. For instance, let’s suppose a trader is stating that the central bank will tighten or ease the monetary policy, in that case, the currencies will be bidding against each other.
When the currencies are traded against each other, they are listed together in pairs, like USD/CAD, EUR/USD, JPY/USD. This represents the USD rate to Candaian Dollars, Euros to USD rate and Japenese Yen to U.S Dollar.
There is a price interlinked with each pair that denotes the price increase or decrease between the currencies. In the foreign exchange or forex markets, the currencies are traded in micro, mini and standard lots. The value of micro lot stands thousand of the given currency, while the mini lot stands at 10,000 of that particular currency and the standard lot reacches upto 100,000 of the given currency,
When you go to a money exchange, you can exchange any amount you want. You can change 55000 PKR to AED, or change 3500 PKR to Riyal or 25000 PKR to AED, it is as per your requirement and ease.
In foreign exchange or forex market, trading is done in set blocks of currency. It is upto you how many sets you want to trade, but it can only be done in sets. For instance, if you require to trade micro lots, you can trades six micro lots (6,000). You can trade also go for trading mini lots and trade 5 mini lots (50,000). For standard lots , if you want to trade 2 standard lots it will make 200000.
The FX or foreign exchange market holds a substantial value because of its massive size. The volume of trading done in the foreign exchange market is considered to be extremely large. According to a survey conducted, the US equity markets in December reached a total of approximately $393 billion.
Even though the trading is done worldwide, the largest trading centers are loathed at New York, London, Hong Kong, Singapore and Tokyo.
Trading in the Foreign Exchange Market
The foreign exchange market works twenty four hours a day, and works in collaboration with other major financial departments that are located in different parts of the globe. This enables you to purchase or sell currencies at any point during the day.
The foreign exchange market consists of a whole range of different avenues that an investor passes through to launch his trade. You can access the electronic networks through various different dealers or financial centers.
Previously, foreign exchange was very complex and was mainly in access to the government, hedge funds or huge companies. As the modern era came, it became pretty easy to take part in the foreign exchange.
Investment companies are inaugurated that provide the chance to indicuduals to open their personal accounts and trade currencies at their ease.
When we talk about electronic markets, traders take up a position in a particular currency with the hope that there is a upscaling in that currency so that they can make a profit.