Foreign Exchange Market Research

Foreign Exchange Market Research

When investing in currency pairs, it is always good to check out the latest Forex (FX) Market Research.

The Rise of the Chinese Yuan as a World Currency

The dollar has always been the dominant world currency. But, since the Federal Reserve has overprinted dollars in the past few years, its value has fallen. Experts expect it to fall even more.

China wants its currency, the Yuan, to replace the US dollar as the world’s reserve currency. According to the People’s Bank of China, assets denominated in the Chinese Yuan have shot up. In the next ten years, experts expect China to surpass the economy of the US. Once that happens, the Yuan will further strengthen. The Yuan is right now the second most traded currency in the US.

How to Make Money in Forex

You can make money with Forex in many different ways. The most common method is the buy and sell approach and wait for there to be an appreciation in the price of the asset. Arbitrage is another way you can make money using Forex. It means buying an asset at a low price and selling that same asset for a higher price.

Important Terms You Need to Know if you Want to Trade in Forex

The “ask” price of a currency is the price you pay if you buy it. There is also currency risk associated when trading with some assets in Forex. Why? Because you can’t be sure if the price of the currency pair is going to go up or down.

There is also the option of a Futures Contract. Futures Contracts are agreements where you agree to either buy or sell the currency at a given price. The involved parties set the price beforehand.

Traders can get some financial products can in the OTC or over the counter market. It is good to have a broad portfolio instead of a few single investments. This strategy decreases financial risk.

A put option is when you agree to sell an asset you don’t have at a set date in the future. This type of trade might sound counterintuitive and even impossible. But, you can make this type of deal in Forex if you think that the price of the asset is going to go up n the future. That way, you will be buying it for a lower price than what you are selling it. Thus, you’ll make a profit if your predictions are correct.

Shorts means when you sell an asset.

The strike price is the price set beforehand when it comes to buying or selling an option.

Slippage happens when the broker closes an order at a distinct price other than the one set at the stop loss. It occurs when there is too much volatility, meaning the cost of the asset fluctuates.

Inflation is a measure of the increase in prices of goods and services over time. Too much inflation puts pressure on federal reserves. It causes central banks to increase interest rates. Thus, the value of the currency will increase, as traders enjoy high returns.

A Forex Broker is a company that offers traders a platform. This platform allows them to buy and sell foreign currencies.

Like other capital markets, Forex exhibits price ranges. Once you identify the trading range, you can set up your buy orders near “support.” You can also set your sell orders near “resistance” to make a profit. The strike price of an option is the fixed price at which the owner can buy (if it’s a call) or sell (if it’s a put) the currency.

Finally, in Forex, a swap is when there are two foreign traders involved. One of them agrees to pay the principal and interest of a loan in one currency. The other one pays it in another currency. The two parties make this trade to hedge against currency risk.

About Foreign Exchange Market Research

Are you thinking of entering the Forex (FX) market?  SIS International can help. We offer Strategy Consulting, Decision Maker Research, Buyer Research, and B2B Market Research. We also do Market Tracking, Focus Groups, Surveys, SIS FinTech Research, and Consulting.

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