Foreign Exchange or FX or Forex trading is the trading in currencies. FX market is the largest financial market in the world, providing the highest liquidity. It features a trade volume of $3.2 trillion and more everyday!
FX trade is famous for its staggering profits as well as for its high risks. This is a decentralized market. There is no tangible platform where buyers and sellers meet. Trader's trade through a network, online is the most preferred one. This market is spread across many time zones of the world. The market never sleeps. It is open 24 hours for 5 and half days a week.
Knowing Forex Better
FX is the medium through which traders exchange currencies of different countries at a price influenced by the market. You might wonder: why trade currencies? One of the reasons is payment of services and products by global companies. Another reason is the forecast of exchange rate movements and an urge to make the most of such fluctuations.
Some of you might ponder: why do exchange rates fluctuate? Well, the value of currencies fluctuates because of the constant change in their demand. The varying rates in Forex trading show the variation in demand.
Becoming A FX Trader
In this trading, you buy a currency when its value is less and sell it when its value is high. Sounds simple, right? Well, the trick is to know WHEN to buy or sell. The entire game revolves around this "when". Fortunes have changed because people did the right thing at the right time. On the other hand, some people have also lost tremendously because they failed to recognize the right time to make the moves. Also, whether you should act on impulse or be always rational is also a matter of consideration in Forex trading.
Currency prices are controlled by a combination of factors, unlike share prices that depend on the profit of companies. The challenge of currency trading lies in forecasting the value of currency. A bigger challenge lies in making the right moves after the forecast.
The good thing about FX trade is the availability of "practice accounts" for beginners. You can get them through most FX brokers. You practice trading virtual currencies based on real exchange prices. It gives you a sense of this trade. When you plunge into the real thing, you don't feel like an alien. Besides this, you can research on Forex trading. There are many websites providing thorough information on how to trade in foreign currencies. They guide you and familiarize you with the strategies used by people who have made millions through FX. Guess what? You can also enroll in FX educational courses to master the art of buying and selling currencies!
No matter what anybody says, the fact is you learn the tricks only when you try out Forex trading. Nobody arrives here as the winner. You need to understand this kind of trade, consult with brokers or financial advisors, and keep a tab on the market trend to gain something out of this high-risk "gamble".
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