January 20, 2021

How to invest in currencies

Everyone can invest in the forex market, also known as market Forex (currencies), but it is very important to learn about the product, know how it works and be aware of these variables that influence the change in its price.

The forex market, the largest in the world, can make you earn money but you have to watch and know how to invest correctly. It is a business alternative that does not have a specific location, is decentralized (There is no central market), it is located in the main stock markets such as New York and Tokyo. It remains active 24 hours a day and opens and closes to the different bags according to the moment.

The activity consists of negotiating with pairs of currencies (EUR / USD, USD / GBP …), buying one in exchange for selling another one of different, according to the belief that one currency will be better than the other. That is, bet that one currency will go up and the other will go down. How do we know this? Coin prices vary by the law of supply and demand, although other macroeconomic variables are also taken into account, such as GDP, inflation, external debt and interest rates.

Everyone can invest in the forex market, also known as market Forex (currencies), but it is very important to learn about the product, know how it works and be aware of these variables that influence the change in its price.

Forex Transaction

All the currencies of the world operate in (foreign exchange), a global market. When we travel to countries that work with currencies other than ours, we have to change some to be able to acquire products or services there. That change varies according to the moment.

If, for example, we exchange euros for dollars, the currency exchange rate (changing) is what will determine how many dollars we will get for our euros. The fluctuations in this rate may be small, but on some occasions it would be a great economic imbalance, such as for example companies that have to pay workers abroad.

Currency speculation

There is the possibility of obtaining a high return on investment in the Forex market, but it is linked to a high risk. Before trading on forex platforms, it is necessary to know how it works and to keep abreast of fluctuations in the value of world currencies. When we make a purchase and sale of currencies, what we expect is that the one we acquire is at a lower price than it will be sold later. If the opposite happens we will get losses in the business.

He Forex market can be compared with the Bitcoin cryptocurrency, a new technological trend in the world of finance, which is developed through computer networks. Virtual currency Bitcoin born as a result of the system Blockchain, a database distributed by blocks, which in the field of cryptocurrencies has begun to use this 2018 as a public notary and that cannot be modified within the transaction system.

Bitcoin Use this blockchain mechanism. Companies like Endesa (electricity, gas and water sector) have carried out this year the first purchase and sale of energy in Spain through this system. Others, like Abertis, continues to invest in more common systems such as shares in the stock market, specifically in the stock exchanges of Barcelona, ​​Valencia, Bilbao and Madrid.

The spanish banking it has been reinventing taking the hand of digital advances and specifically, at present, with the aforementioned blockchain. According to experts, it is a complex technology but in Spain the first regulated network based on this method, or rather, data exchange ecosystem, has already been created.

According to these experts, the digital transformation will be accelerated and will provide security, efficiency and truthfulness. Users can unify all their digital identities into one. As contemplated, this phenomenon will change, someday, the use of money.

However, at the moment it is in an experimental phase where entities such as BBVA, Bankia, CaixaBank and Santander are already taking positions and performing first tests. For example, Santander has launched an international transfer platform thanks to the blockchain , and believe that these types of technologies help improve the efficiency and security of the bank.

For CaixaBank it is also an interesting method that improves the security of international payments, but they are not in favor of cryptocurrencies since they see them volatile and, therefore, high risk (as we had previously mentioned).

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