Are you interested in forex trading? If you are a beginner in forex trading 101, there is so much that you should learn, but at the same time you do not have to worry about whether or not you can make it in investing in forex trading. You do not have to focus too much on how others are doing better than you. You will be able to reach at a place that will make you earn more just like them. But first of all, you need to understand the basics of forex trading.
Forex is the short term referring to foreign exchange. The forex market is the place where different currencies all over the world are being traded. Currencies are very important to most people all around the world, whether they notice it or not. This is because currencies are needed to be traded so that people can conduct trading and business with other countries. You see a lot of foreign exchanges with travelers when they go abroad. While developed and highly industrialized places accept major currencies like Euro and US dollars, not all places in that country accept them. This is why you need to have all the money you need to exchange with the local currency. Because of the need to exchange foreign currencies every day, it is the first reason why this kind of market is the largest and most liquidated financial market. It is even larger compared to other markets like stocks, in which it gets a traded value of about US $2,000 billion each day on average.
The unique aspect of this kind of market is that there is no central place for the foreign exchange. The process is conducted over-the-counter electronically. All transactions that happen in this market go through the computer networks between various traders all over the world, instead of making a single centralized exchange. The market rarely sleeps as it functions 24 hours each day, half each day in a week and the currencies are traded in various major centers of finance such as those located in Tokyo, New York, Zurich, London, Hong Kong, Paris, Frankfurt and Sydney – almost in every time zone. It also means that when the US’ trading day already ends, the market starts a new session in Hong Kong and Tokyo. This could also make the forex market to be intensely active any time within the day and the prize quotes of each currency changing always.
Risks And Benefits
Forex trading is one of the largest types of investments that people do. Investors are able to place extremely high trades even without affecting the exchange rate given at a particular currency. The large positions in this market are then made accessible to various forex traders because of its low margin requirements that are utilized by most of the brokers of the industry. A good example of this is that it is possible for traders to take control of a US$100,000 and this is done by putting down for as low as US$1000 up front and then borrowing the remainder from their forex broker.