What is Forex?
Forex or Foreign Exchange (also FX) is a global market that involves the trading of currencies and is the world’s largest market. A Forex trade involves buying one currency and selling another or exchanging one currency for another So the price of one moves against the value of the other currency.
Forex market trading volume is the largest of all financial markets, and its liquidity is unrivaled. It means you can enter and exit trades quickly and easily.
All trading is done over the counter, meaning there is no physical exchange. Traders receive quotes from brokers and liquidity providers, which are banks. You can trade currencies from any country in the world, and it is commonly known as Forex or currency trading.
Trading in the Forex market
The Foreign Exchange (FX) is a large global market that is open twenty-four hours a day, Five days a week. Unlike stocks, bonds, and other financial instruments, Forex trade takes place over the counter rather than on a central exchange.
The majority of retail traders and institutional investors trade currencies online using a broker’s platform without the physical possession of the currencies. Traders benefit from the fluctuations in the exchange rate, while institutional investors also use the Forex market to hedge their investments against possible fluctuations.
There are several ways to trade in the Forex market, but the most important thing to remember is to be aware of the risks involved. Because you’re trading in other nations’ currencies, you’ll be exposed to various economic risks. It means that you need to understand the economies of the countries that you plan to trade. There are several reasons to trade FX market. However, we will discuss the four most important reasons to trade Forex: liquidity, Profitability, Volatility and Leverage
To make an right decision about trading you need better understanding about these four factors. After all, these factors are critical to the success of any trading venture.
Before starting Forex trading, you should also consider your financial capability. If you’re new in trading, you should start with a smaller investment and gradually increase it as you learn more about trading. Let’s move on currency pairs.