Before understanding Forex management, you should understand the meaning of Forex. Forex's full name is foreign exchange. It is the system where one country's currency is converted into other country's currency due to buying or selling of any goods or service in world market.
Forex is also a market where currencies of different countries are bought and sold. This is world market which opens 24 hours. Different business organisation can buy cheap loan and sell it at high prices due to forex market.
Now, understand the Forex management.
Forex management is the management of forex rate and take the big business decisions on the basis of foreign currency rates. You know, to control on other country's currency value is not possible because there are lots of factors which affects it. So, as the owner of any company, you have to manage your business by close eye on forex.
For example, you are doing the business of import and export trading. Now, you can decide what
quantity of material, you have to import from USA if today is Rs. 64 per $ rate. You need to keep whole history record. You need to do trend analysis. If you are doing business of forex. You buy one country's currency and sell it when you see profit. You also need to plan, organise and control your forex business. All will in your forex management.
Management of Risk in Forex
1. Currency Derivatives
One important management you have to do that is risk management in forex which is also part of forex management. You can loss big in business if you take wrong decision in international business due to changing the value of your country's currency with compare to other country's currency. For managing it, you can use currency derivatives like currency future and currency options.
2. Stop loss order
In this management of risk in forex. Person will say to broker that he should not buy when loss will start on any new buying. For example, your currency buying of three is earning $ 100 due to Indian and usa currency difference. If you have ordered to your broker to stop buy if loss is $ 300. Your broker has checked and your loss is $ 300, he stopped to buy. By this way, you can save from loss.
Forex is also a market where currencies of different countries are bought and sold. This is world market which opens 24 hours. Different business organisation can buy cheap loan and sell it at high prices due to forex market.
Now, understand the Forex management.
Forex management is the management of forex rate and take the big business decisions on the basis of foreign currency rates. You know, to control on other country's currency value is not possible because there are lots of factors which affects it. So, as the owner of any company, you have to manage your business by close eye on forex.
For example, you are doing the business of import and export trading. Now, you can decide what
quantity of material, you have to import from USA if today is Rs. 64 per $ rate. You need to keep whole history record. You need to do trend analysis. If you are doing business of forex. You buy one country's currency and sell it when you see profit. You also need to plan, organise and control your forex business. All will in your forex management.
Management of Risk in Forex
1. Currency Derivatives
One important management you have to do that is risk management in forex which is also part of forex management. You can loss big in business if you take wrong decision in international business due to changing the value of your country's currency with compare to other country's currency. For managing it, you can use currency derivatives like currency future and currency options.
2. Stop loss order
In this management of risk in forex. Person will say to broker that he should not buy when loss will start on any new buying. For example, your currency buying of three is earning $ 100 due to Indian and usa currency difference. If you have ordered to your broker to stop buy if loss is $ 300. Your broker has checked and your loss is $ 300, he stopped to buy. By this way, you can save from loss.
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