About Forex Trading
The forex market is the largest international currency exchange market in the world, which runs non-stop during the working week. Professionals such as bankers do most forex trading. Forex trading is generally done through a forex broker-but there is nothing to stop anybody from trading currencies. Do you want to learn more? Visit official site. Forex currency trading helps buyers and sellers to obtain the money they need for their company and sellers who have purchased currency to swap for a more affordable currency they have. The world’s biggest banks control forex, and according to a report in The Wall Street Journal Europe, the top ten dealers active in forex dealing account for approximately 73 percent of the volume of trading.
A large proportion of the remaining forex trading, however, is speculative with traders building up an investment they want to liquidate for profit at some stage. Although a currency can increase or decrease in value relative to a wide array of currencies, all forex trading transactions are based on currency pairs. Thus, while the Euro may be ‘strong’ against a currency basket, traders would be traded in a single currency pair and will simply be concerned with the ratio Euro/US Dollar (EUR/USD). Changes in relative currency values may be incremental or caused by specific events like the toxic debt crisis that occurs as writing this.
Because currency markets are global, the daily traded volumes are vast. The big advantages of Forex trading for the large corporate creditors are:
Huge liquidity-more than $4 trillion per day, that’s $4 trillion. It ensures someone is always ready to trade with you.
Each free money in the world is exchanged-that means you can exchange the currency you want at any time
Twenty-four hours of business during the five-day week
Operations are open which means you can exchange at any time with any part of the world
From the smaller trader’s point of view, there are also lots of benefits, such as:
A rapidly changing business-that ‘s one that constantly evolves and provides the opportunity to make money
Very well developed risk-control mechanisms
Ability to go long or short-that means you can make money on rising or declining markets
Leverage trade-meaning you can benefit from large-volume trading while having a relatively low base of capital
Lots of zero-commissioned trading options
How The market forex works
As forex is all about foreign exchange, all transactions are made up of a currency pair-say, the euro and the US dollar, for example. The basic tool for forex trading is the exchange rate that is expressed as a ratio between the two currencies’ values such as EUR / USD = 1,4086. This value, referred to as the ‘forex rate,’ means one euro would be worth 1.4086 US Dollars at that particular time. This ratio is always expressed at 4 decimal places which means you could see a forex rate of EUR / USD = 1.4086 or EUR / USD = 1.4087 but never EUR / USD = 1.40865. This ratio’s rightmost digit is called a ‘pip.’ Thus, a change from EUR / USD = 1.4086 to EUR / USD = 1.4088 would be referred to as a 2-pip change. Therefore one pip is the smallest unit of trade.
An investor purchasing 1000 Euros using dollars would pay $1,408.60 with the forex rate at EUR/USD = 1,4086. If the forex rate then changed to EUR / USD = 1,5020, then the investor could sell their 1000 Euros for $1,502.00 and bank the $93.40 as profit. If that doesn’t seem to be a big amount for you, you must put the sum into context. The forex rate does not simply change in a uniform way with a rising or falling market, but oscillates and profits can be taken many times per day as a rate oscillates around a trend.
When you expect the EUR / USD value to fall, you may trade the other way by selling Euros for dollars and then buying back when the forex rate has changed to your advantage.