The foreign exchange market impacts every individual and business. Today, individuals are entering the market with the help of technology and numerous online foreign exchange platforms. A good amount of research is recommended before selecting a dealer and entering the market.

Like other markets, the Forex market is based on supply and demand except when the government intervenes and pegs or sets the exchange rate. The price of one currency compared to another determines the exchange rate. The exchange rate reflects a number of factors, including:

  • Economic data
  • Prevailing interest rates
  • Investor and consumer sentiment
  • National or international political conditions
  • Future strength or weakness
  • Actions by central banks

Large institutions rely upon technical analysis as well as other considerations to determine their Forex investment strategy. But, that is another chapter….

Hiland Doolittle

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