Forex and Real Estate

Forex : Introduction
The Foreign Exchange market is also known as Forex, Spot, FX and Currency is one of the biggest market in the world in terms of the volume traded as $3 billion is traded every day. Forex exists whenever one currency is traded with another. In other words, Forex is basically buying of one currency and selling another at the same time. Forex is operational 24 hours a day and 5 days a week unlike any other market which are operational for a limited time in a day.

Forex: History
Before WWI, most Central banks permitted paper money to be converted into gold without any need of Central bank permission. However, this kind of conversion started becoming a problem whenever there was a mass conversion of paper money to gold as at these times there was a greater supply of paper money but shortage of gold which results devastating inflation and political instability.
Near the end of WWII, in 1944 an agreement named “Breton Woods Agreement” came into existence in USA which was aimed to keep cash from draining out of war-ravaged Europe. As per this agreement all currency values fixed to the value of U.S Dollar, which was fixed to the gold.
In 1971, “Breton Woods Agreement” collapsed which brought foreign exchange into existence as U.S Dollar was no longer fixed to gold which increased the currency market volatility and trading opportunities.
In 1973, Smithsonian and European Joint Float agreements also collapsed which was the beginning of the true free-floating foreign exchange system that drives the market today.
Who can trade Forex?
In early 1980, Forex trading was limited to financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. But in the late 1990’s with the arrival of internet the whole scenario changed and it became possible for an average investor to trade currencies easily with the click of the mouse.
What affects Foreign Exchange market?
Forex is affected by many factors, and currency prices are a result of supply and demand which is constantly shifting and the price of a currency in relation to other currencies shifts accordingly.
The main factors which affect foreign exchange generally fall into three categories namely economic factors, political factors and market psychology.
1. Economic factors
Economic factors include various factors that affect a currency. These factors include following:
Government policies: Government policies such as fiscal policy (budget policy), monetary policy (by which a government control the supply and demand of money, which is reflected by level of interest rates) play a important role in a currency performance.

Economic reports: Economic reports which include reports of GDP (Gross Domestic Product), employment levels, retail sales etc. describes the county economic growth. Good reports have a positive effect whereas bad reports have negative effect on the country currency.

Trade balances: Trade balances show the demand of goods and services of a country. Trade deficits have negative impact on a nation currency.

Inflation level: Mostly rising inflation level have negative effect on a currency as it erodes purchasing power, thus demand, for that particular currency. However, sometimes rising inflation can also have positive effect as because of the expectations that central bank would raise the short-term interest to fight rising inflation.
2. Political conditions
Political conditions in a country have major effect on a it’s economy as political parties are the one which run government who make various important policies which impact its economy and if these political parties are unstable or cannot make right decision due to some reasons then that country can see a decline in demand for its good and services which would decline its currency value.
3. Market psychology
Market psychology depends on several factors. Traders mainly invest in a currency which has a greater demand. This demand increases on the basis of the performance of the currency. Main factors in market psychology are as following:
Long-term trends: Long term trend of a currency are often visible which mainly depends on economic and political conditions of the country and traders do keep this thing in mind when they trade a currency.

Economic reports: Economic reports reflect the economic policies which need to be seen closely at the time of release as any important report can have impact on the market. Important reports keeps on changing with time as in recent year money supply, employment, inflation and trade balance have got more importance than other reports and hence are watched closely.
What are the ways to analyze Forex?
There are two ways to analyze Forex and these are “Fundamental Analysis” and “Technical Analysis”. Fundamental analysis includes study of various important policies, economic reports, interest rates, political and other important condition of a country. Technical Analysis includes the study of price movement, charts and other technical indicators (depends on trader). These are the only two ways to analyze Forex.
Who are the major participants in Forex?
Major participants in Forex are commercial banks, exchange markets, investment management firms, central banks, hedge funds, broker companies and individuals
Following are the top currency traders in the world:
Deutsche Bank, UBS AG, Citi, Royal Bank of Scotland, Barclays Capital, Bank of America, Bank of America, HSBC, Goldman Sachs, JP Morgan and Morgan Stanley.
Conclusion:
Forex is known by different names and is one of the biggest financial market in the world right now. In early 1970 it was mainly traded by banks, countries and very rich individuals but in the late 1990 small investors also got the opportunity to trade in the Forex with arrival of internet. Forex is affected by three major factors namely economic reports, political conditions and market psychology. These are the main factors that drive a currency and depend on currency to currency. Banks are the major participants in the foreign exchange market as 53 % of the transactions amounts to interbank transactions. Forex can be analyzed through technical and fundamental analysis. Forex is one of the best opportunities for a person who likes to be his own boss as profits in this market depends on your trading skills.