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A Guide To Investing In The Forex Market

by Olufisayo
A Guide To Investing In The Forex Market

Forex trading is the speculation and exchange of currencies by investors, traders, businesses, banks and governments. The forex market is also called the foreign currency market, the currency market and the Fx market. This is the biggest market with the highest liquidity with approximately $3.98 trillion traded every day.

The forex market is open five day each week and 24 hours each day. The major trading centers are located in Paris, New York, Hong Kong, London, Sydney, Tokyo, Singapore, Frankfurt and Zurich. The forex market does not have a central marketplace like stocks and all transactions occur over the counter. All major banks quote forex and the prices vary.

The broker platforms use feeds from different banks and quote the average. The trades are transacted by the brokers who sell the currency pairs.

A Guide To Investing In The Forex Market

Forex trading is speculating on the prices of different currencies against each other. When an investor believes the Euro will increase more than the U.S. dollar, they purchase a EUR/USD pair. If the value of the Euro increases and the investor purchased low, they sell the pair high for a profit. If the value of the U.S. dollar increases, the trader will lose money. The market is flexible, and many investors have been successful due to a good strategy. The strategy must take the volatility and high leverage of the market into consideration to be effective. It is important to know exactly how much money the trader has in the forex market and understand there is a risk involved.

       

The banks are responsible for most of the commercial forex transactions. Some banks trade billions of dollars on a daily basis. This is often done for proprietary traders who have accounts with the bank. Numerous businesses participate in the forex market to purchase or sell services or goods in foreign countries. A portion of the daily trading is from businesses making transactions in numerous countries. The central bank of many countries is an important aspect in the foreign exchange markets. This can cause the currency of their country to decrease or increase due to the interest rates, inflation or an attempt to control the supply of currency. The market can also be stabilized by using foreign exchange reserves. Tradegl.com

Between seventy and ninety percent of transactions made on the forex market are speculative because the investor is not planning to hold onto the currency. They are speculating the price movement of the currency purchased will move in their favor. Some of the largest transactions are conducted by major hedge funds using billions of dollars to speculate on and control the currency markets. When an individual visits another country and exchanges their currency, they have become a part of the foreign exchange currency market. The retail forex industry is consistently growing due to the internet and forex trade platforms. Retail traders are indirectly using a bank or a broker. Brokers such as TradeGL serve their customers as a type of agent. They charge a commission to make the trades for their clients.

There are many advantages to trading in the forex market. Many retail brokers will fund a trading account for just $250 and in some instances the individual can begin trading the same day. All that is required for an order execution is clicking a mouse. It is also much easier to choose from currency pairs than to try to research thousands of different stocks. Trades can be made from across the globe with just an internet connection and a laptop. The retail market offers commission free trading making the cost for the transaction lower than commodities or stocks.

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