Browse > Home / Finance / Forex Trading: Start With the Basics
Foreign exchange trading, or forex trading for short, refers to the exchange of different currencies used in different parts of the world. It does not need a central exchange site like the ones in stock market trading. Due to time zone differences of countries across the world, foreign exchange trading operates on a 24-hour basis.
The foreign trading market is the largest across the globe in terms of volume of trading. It far exceeds the volume of trading at the New York Stock Exchange. The majority of foreign exchange traders are individuals and private companies.
Because of the absence of a central exchange, forex trading happens between two parties directly. Buyers and sellers communicate and trade via the phone, the Internet or other communications networks worldwide.
In addition, trading forex is also speculative, meaning, they are based on expectations on whether a certain currency would rise or fall, depending on current market conditions. It is risky business, but the returns have often proved themselves worth the risk.
Fundamental Concepts on Forex Trading
In forex trading, investors usually buy and sell two currencies at the same time. One example of this cross combination is the pairing of the US dollar with the Japanese yen. The major currencies traded include the US dollar, the euro, the Japanese yen and the British pound.
Trading normally occurs in the spot market, which is the largest because of its volume. Here, trades are made and completed directly and on the spot. You don’t have to wait too long to settle.
Best Features of Forex Trading
1. No 4pm trade closing time.
The forex trading market need to be open 24-hours a day from Sunday night to Friday night. This allows traders to react to sudden changes in the value of currencies around the world.
2. Forex trading is very liquid.
You can easily convert your traded currencies, especially if they are considered major currencies, into cash in the forex market. The high liquidity of major currencies keep their spreads narrow, that is, the difference between the buying and selling prices of the currency is kept at a minimum. As a consequence, the prices of major currencies remain stable through a period of time.
3. Strong potential for profits
Traders are always on the lookout for currencies with declining values. The reason behind this is when one currency appreciates, another currency will devaluate in relation to the first currency. If a trader purchases a currency that underwent devaluation, he can sell it at a later time when the currency appreciates and earn a big profit at the same time.
4. Trading of highly liquid currencies require minimal costs
This is true for major currencies. The ease of trading these major currencies make commissions redundant and unnecessary. The currencies are valued for their own sake, not because of any sales incentives.
These are just a sampling of things you need to learn regarding forex trading. If you want more comprehensive advice on how to make your forex investments grow, your best option is to ask experts or investors with a lot of experience on trading.
The author is a multifaceted writer. She writes articles for a number of subjects like marriage and relationship advices, great deals on special occasion dresses and ball dresses, family and parenting concerns, fashion and beauty tips and a lot more.
categories:
View the original article here
Foreign exchange trading, or forex trading for short, refers to the exchange of different currencies used in different parts of the world. It does not need a central exchange site like the ones in stock market trading. Due to time zone differences of countries across the world, foreign exchange trading operates on a 24-hour basis.
The foreign trading market is the largest across the globe in terms of volume of trading. It far exceeds the volume of trading at the New York Stock Exchange. The majority of foreign exchange traders are individuals and private companies.
Because of the absence of a central exchange, forex trading happens between two parties directly. Buyers and sellers communicate and trade via the phone, the Internet or other communications networks worldwide.
In addition, trading forex is also speculative, meaning, they are based on expectations on whether a certain currency would rise or fall, depending on current market conditions. It is risky business, but the returns have often proved themselves worth the risk.
Fundamental Concepts on Forex Trading
In forex trading, investors usually buy and sell two currencies at the same time. One example of this cross combination is the pairing of the US dollar with the Japanese yen. The major currencies traded include the US dollar, the euro, the Japanese yen and the British pound.
Trading normally occurs in the spot market, which is the largest because of its volume. Here, trades are made and completed directly and on the spot. You don’t have to wait too long to settle.
Best Features of Forex Trading
1. No 4pm trade closing time.
The forex trading market need to be open 24-hours a day from Sunday night to Friday night. This allows traders to react to sudden changes in the value of currencies around the world.
2. Forex trading is very liquid.
You can easily convert your traded currencies, especially if they are considered major currencies, into cash in the forex market. The high liquidity of major currencies keep their spreads narrow, that is, the difference between the buying and selling prices of the currency is kept at a minimum. As a consequence, the prices of major currencies remain stable through a period of time.
3. Strong potential for profits
Traders are always on the lookout for currencies with declining values. The reason behind this is when one currency appreciates, another currency will devaluate in relation to the first currency. If a trader purchases a currency that underwent devaluation, he can sell it at a later time when the currency appreciates and earn a big profit at the same time.
4. Trading of highly liquid currencies require minimal costs
This is true for major currencies. The ease of trading these major currencies make commissions redundant and unnecessary. The currencies are valued for their own sake, not because of any sales incentives.
These are just a sampling of things you need to learn regarding forex trading. If you want more comprehensive advice on how to make your forex investments grow, your best option is to ask experts or investors with a lot of experience on trading.
The author is a multifaceted writer. She writes articles for a number of subjects like marriage and relationship advices, great deals on special occasion dresses and ball dresses, family and parenting concerns, fashion and beauty tips and a lot more.
categories:
View the original article here
No hay comentarios:
Publicar un comentario