Do you know what is forex trading and why it is important in the global market?
If you are involved in the foreign exchanges and deal with the different currencies then you would have some idea about the forex trading and its importance in the global economy. For the beginners, forex is the process of the foreign exchanges that is involved in the exchange of one currency to another and which is required in the different conditions such as while traveling to a foreign country and while dealing with a foreign market. In the current conditions, forex trading is considered as one of the most profitable tradings with a standard turnover of US$5.3 trillion every day.
If you will compare the New York Stock Exchange which comes with a daily turnover of standard US $50 billion, you will come to know how the forex trading is dominating the global market and why the foreign exchange market is known as the biggest financial market all over the world. Currently, the foreign exchanges are making more profits as many traders are involved in this process.
What is forex trading?
Forex trading is an act that specifically deals with buying one currency and selling another depending on the market situation. And the value of the currencies will be adjusted during the procedure. The values of the particular currencies rise and fall against one another due to the number of the reasons, includes the geopolitics and economics. The objective of the forex trading is to make profits from the foreign exchanges. And the expert trader has some idea about which currencies have the better chances of the profits and which prices are going to rise. They do the trading depending on the speculation.
Unlike any other financial market, you will not find any specific physical location for the OTC forex market. But the trades are placed twenty-four a day via the global network of business that includes both the individual and banks. As the currency prices are not constant, it keeps changing against each other depending on the demands of the market, it offers many trading opportunities.
24- Hour Forex Trading
One of the key factors of the growing popularity of the forex trading is that the forex markets are open all the time, twenty-four hours a day, from a Sunday evening to the night of the Friday. Trading goes on the clock without any exception. It opens on the morning of Monday in New Zealand, Wellington, and progresses towards the Asian market such as the Singapore, Tokyo. Then it moves to the London and finally it closes on the Friday evening in the final destination in New York.
As the prices are available to trade for twenty -four hours a day, it makes easier for the traders to trade whenever they want and to utilize the market condition most. But in some cases, when the prices are the below average, the traders cannot make more profits as the price does not rise up to their expectation.
Foreign exchange is one of the leveraged products that do not demand the deposit of the full amounts for the trading. Instead, you can make a deposit of small percent of the total value to place your trade. That means that the possibility of the loss and the profit can make a big difference in the forex trading than any other traditional trading. But to make profits, you will have to understand the existing value of the currencies and the market conditions. As it keeps fluctuating, you need to be much more careful while placing a trade.
Pricing is not difficult to understand as it quoted nicely in terms of one currency against another. You will find the currency pairs with one base currency and another counter currency. You will find the base currency on the left of the pair and the counter currency will be available on the right side.
For instance, in the EUR/USD currency pair, USD is the counter currency and EUR will be the base currency. The forex prices are triggered by the increase and the decrease of the currency values. If the price of the EUR/USD currency pair falls that means the counter currency is making appreciating and the base currency is losing the value.