Foreign Exchange Trading (Forex Trading) is the worldâs largest market where currencies are traded. This involves buying, selling and currency exchange at the current currency prices. As per the volume of trading involved, forex trading is by far the worldâs largest market. Every day over 4 trillion USD are exchanged in the forex market. The market however doesnât determine the relative values of the traded currencies but instead it sets the current market price of a currency as demanded by the other.
Forex Trading is unique because;
When compared to other markets of fixed income it has low margins of relative profits.
The market is available for 24 hours a day with the exception of weekends. The major trading centers are located in New York, London, Sidney, Hong Kong, Singapore, Frankfurt, Paris, Zurich and Tokyo.
Has numerous factors that affect the exchange rates
Its geographical dispersion as itâs available online.
uses leverage to enhance on loss and profit margins with respect to account size and most importantly,
The marketâs huge trading volume that represents the largest asset class in the world thus leading to the highest liquidity.
Why is Forex Trading Popular?
Itâs not easy to become a forex trader, but being one offers you the most amazing lifestyle regardless of any profession in the world. Its major advantages include;
Ease of access- one can fund their trading account with as little as 250 USD and begin trading on the same day.
Freedom of trade globally as business can be done online.
Your Focus is only on few currency pairs instead of thousands of stocks that can make one get lost.
Trading is commission free with overall cheap transactions costs.
The trading markets volatility allows traders to make profits regardless of market conditions with high probability market opportunities.
Forex Trading market is the leading liquid financial market (it has many bid & ask offers with easy executable trade at the desired trade as it has multiple buyers and sellers) in the world. Main participants in the Forex Trading are international banks, governments, currency speculators, financial institutions and also individuals.
BASIC FOREX TRADING TERM
This is the currency rate used against another currency rate.
The Bid Price is the amount of money you use to sell a currency at i.e. the Forex Market is willing and able to pay you this price for the particular sold currency.
The Ask Price is the amount of money you use to buy a currency at. It also means that itâs the price at which the Forex Market is able to sell the currency to you.
A spread is the difference between the Bid Price and the Ask Price.
Percentage In Point commonly known as PIP or Point is same as the minimum price increase of the Forex Trading Rate. In Forex Trading, the most common PIP is 0.0001.
The most traded currencies are the USD, Euro, Japanese Yen, Sterling Pound, Australian Dollar, and Swiss franc, Canadian Dollar, Mexican Peso and the Chinese Yuan.
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