explain this FOREX to me in street words please !!?

Friday, January 31, 2014 , Posted by Ryanita at 4:00 AM




Pilot777


This paragraph from a website and i want to understand it in street words , please tell me what is saying here in simple words :

"Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to the other countries' economies. "



Answer
Find a better website. They couldn't explain a circle without confusing someone.

When trading in Forex, you are buying and selling currencies, one against another. You buy yen using dollars. Later on, you have to sell yen and get dollars back to finish the trade. You can do this with any currency pair, and you can buy either one first.

Buy yen with euros.
Buy sterling with chinese yuan.
Whatever.
You just have to do the other half later on to close the trade.

Is that more clear?

I need forex help!!!!!!!!!!?




Mi R


I understand how forex trading work's but i don't quite get the basics behind the supply and the demand that drives the market.
I read that if the supply of the USD is getting larger and the demand is getting lesser the USD will lose value.How can the demand for money drop.We all want it.



Answer
Don't confuse the demand for money with the demand for US money. Assume some wealthy person in New York has $10M US dollars in a bank down the street. Then assume that the Federal Reserve chooses to increase the US money supply by printing $700B additional dollar bills of various denominations in order to say, fund the bailout package currently being voted on in the house of representatives. Ceterus paribus, the supply of US dollars is increasing while demand remains static, which according to the basic tenets of economics would drive down the price people are willing to pay for it. This means that the US dollar is going to depreciate relative to other currencies, so the wealthy New Yorker might choose to exchange some of his $10M for â¬2M Euros because the Euro is expected to hold its value or appreciate. So his demand for money is not dropping, his demand for US money simply declines just as his demand for a foreign money increases. Make sense?




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