Forex trading is only direct access to trading different types of currencies. In the past, exchange rate trading was restricted to major banks and trading institutions. Nevertheless, the developments of modern technology have made it possible for young traders to take advantage of the many advantages of Forex trading by using the available online trading platforms for trading.
World currencies are priced at floating exchange rates, and are always traded in pairs. Almost 85% of international transactions involve major currency trading. Four major currency pairs are usually used for investment purposes: EUR / USD, USD / JPY, GBP / USD and USD / CHF (USD / CHF).
If you think that one currency will rise in value against another currency, you can exchange the second currency for the first currency and then stay in that position. If things go as planned in the end, you can do a counter deal, according to which you will exchange the first currency again for the other currency to reap profits from this process. Keep in mind that there are no dividends in Forex trading.
Transactions in the Forex market are performed through dealers in other banks or financial brokerage firms in the Forex. Forex has become an essential part of global markets. When you are sleeping in your bed, dealers in Europe are trading currencies with their Japanese counterparts. Consequently, the Forex market remains open 24 hours a day and traders in major institutions operate three shifts daily, 24 hours a day, seven days a week. Clients may place Take Profit or Stop Loss orders with brokers for execution at another time. Price movements in the Forex market are very smooth and without the price gaps you encounter almost every morning in the stock market. The daily trading volume in the Forex market revolves around $ 1.2 trillion, and therefore any new investor can open and close trading positions without any problems.
The confirmed fact is that the Forex market never stops; even on September 1, 2011 you could still trade currencies today. The currency market is the largest and oldest financial market in the world. Also called the foreign exchange market or an abbreviation forex market. It is the largest and most liquid financial market in the world and is traded 24 hours a day in the so-called interbank currency market.
When you compare them, you will find that the futures market only represents 1% of this volume. Unlike stock and futures markets, currency trading is not exchanged on a central exchange. Trading moves from major banking centers in the United States to Australia and New Zealand, then the Far East and Europe and finally returns to the United States. It is indeed a fully circular trading game. In the past, the interbank Forex market was not available to young speculators due to the large minimum transaction sizes, conditions, and strict financial requirements. Banks and big currency traders and sometimes very large speculators were the main dealers. Only them could take advantage of the impressive benefits of the currency market, such as the massive liquidity and the strong nature of the trend in many global exchange rates.
Today, the Forex market brokers can divide up the larger interbank units and thus give young traders like you and me the opportunity to buy and sell a number of small contracts. These brokers give any trader, regardless of size, including small speculators or smaller companies, the opportunity to trade at the same prices and during the same market moves as much as the big players who dominated the market in the past.