Did you know that forex is the largest and liquid market with a daily trading volume of more than USD4 trillions per day? Here is a detailed explanation of how to make benefit of it.
Forex stands for 'foreign exchange', which is an activity of buying and selling one currency for another currency. This is the largest liquid market with a daily trading volume reaching US $ 4 trillions. Unlike stock exchange, Forex is traded by interbank, over-the-counter (OTC) that means no institution who dominated a trading. Forex market operates 24 hours a day between individuals with a broker, broker with a bank and bank with a bank. If Asian session ends, Europe session is obout to begin, and continued by AS session, so the trade will not disconnected and go on for 24 hours from Monday to Friday.
Most forex market participants merely exchange their currency for a business purpose. Like a multinational company that has to pay the wages and others expenses in various countries which sell their product. The company and goverment who buy and sell the products or services from other countries as well as the conversion of export income.
But there are also traders who predict the movement of currencies in order to gain the benefit from the difference of buying and selling price. Investors usually use significant information that has been anticipated by the market as basis for trading.
The Moving Market
Forex is always moving, fluctuate to the cash flow and anticipation of global macro economic condition. There are advantages of currency fluctuations that can be taken by knowing economic fundamentals, using technical indicators and applying money management. They will help traders to exploit invesment opportunities in a forex market.
EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD are pairs of currencies commonly used to trade. However, forex market is not only limited to those currencies, but also including USD/CAD, USD/SGD, EUR/JPY, EUR/CHF, GBP/JPY etc. The concept of trading is about buying at a low price and selling at a high price. The value of a currency is always changing, affected by amount of the international trade, interest rates, the central bank and government's policy, sentiment and others economic indicators. Determine the trend and buy the currency that will strengthen or sell the one which will weaken.
Being involved in the world of forex might be scary for the first time, investors has to make his trading plan familiar with the system of the currency movement. Casino is a place for the gamblers, who plays with odds and chances. It is different with forex trading. Forex market is a place for people who is interested to invest, not to be rich in a short time.
Practice Makes Perfect!!
So, are you interested in forex? Before starting to put funds in a real account, practice first with a demo account. Learn to analyze and trade virtually before starting with a real account. Forex is an art of analyzing market trend, so always observe them and don't go against the trend.
Keep on learning and analyzing. It shall make you better at trading than just relying on luck. Patience is another essential element in trading. Don't expect to get much money when you are still a beginner. Build equity slowly but sure, with a combination of a money management so you will be able to get significant invesment return.