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what is a forex trading

Trading is the real world market. Forex trading is a place where the prices of the exchanged units change. This is the world’s largest market place for trading. It is an act of buying and selling different national currencies in exchange of other. Currencies are always used to trade and exchange.

Exchange of currencies is most common when travelling. You can’t travel with your native currency. For example, if your planning to go for a vacation and you have boarded from France and landed in Europe. The very next thing you need after getting off the flight is a taxi. Now, how do you pay for the taxi? Do you think the driver would accept your France currency? Definitely not. You have to exchange your native currency to Euros.

As a tourist have to exchange your currency to the local currency.

Forex financial market is very high due to the exchange of currencies. The turnover of forex is about $2000 per day. Almost higher than the stock market. You can trade “currency pair” i.e., you can buy a currency using another currency. Advantage of the international market is that there is no special market place for currency exchange. Everything is done electronically over- the- counter. This means that transactions are done internally through the computers around the world. This type of transaction is known as Online trading (iForex).

iForex provides financial products like shares, indices, commodities and forex.

Key elements of iForex

  • Take part in the largest financial market
  • Open large deals with low investment
  • Invest in currency pairs
  • Free access to free educational resources
  • Free training with a trading coach
  • Trading made easy. You can trade in your leisure time either from mobile or desktop

Features of forex trading

  • Trade 24hrs for 5hrs a day
  • Margin trading
  • Price improvements

What type of currencies can be traded?

There are many types of currencies available. In fact, there are about 83 pairs of currencies.

1. Majors

The most often traded currencies are majors. 85% of the foreign market exchange through majors. This type of trading majorly includes US dollars (USD).

2. Cross pairs

The currencies excluding USD are cross pairs.

3. Exotic Pairs

Transactions are done with one major currency along with the currency of the emerging company.

Spot, forward and future market

There are three methods of trading followed by most of the institutions, corporates and by individual traders.

Spot

In forex trading, the spot market is the largest. It is an asset for the future market. With the advancement in technology, trading is done electronically. This the reason why spot market is most reliable and trustworthy. Most of the forex trading is done with the spot market.

In the spot market, trading is done in accordance with the current price. The price is dependent on supply, demand and on other factors like interest rates, economic statements, ongoing political issues and the future of currencies. Here, when a deal is finalized, it is known as “spot deal”. In the Spot market, trading is done as a bilateral transaction. A party delivers the agreed amount of currency to the counterparty and receives another form of currency with the agreed- upon currency exchange value. Later, the settlement is done in cash. The whole process of spot market transactions will take about two days.

A spot market is especially known as the “deals with the transaction in present”.

Forward and Future markets

These are popularly used by the companies who want to protect themselves from the risks. These do not trade with the actual currencies. Instead, they deal the currencies with the specific PPU (Price Per Unit) and settlement rates.

In Forward market, deals are bought and sold over the counter. Dealing is done between two parties.

Future deals are purchased and sold with the standard size, date of settlement on the public commodities. Future contracts must be done with particular details like,

  • Number of units traded
  • Date of delivery and settlement
  • Price increments

These type of contracts can be bought and sold before the expiry date and are settled for cash.

“Leverage” for trading

It is a myth that only a rich can trade. Bursting the myth, “Leverage” tool will help you trade even if you aren’t rich. You can relatively choose large deals with very little investment.

Want to open your first currency deal?

Here are the steps for you

  • Choose the currency
  • Choose the size of the deal
  • Chose direction
  • Close the deal and get profits into your pockets

Benefits of Forex trading

  • Converts assets into cash quickly
  • Buy and sell a currency with a single click
  • Minimum amount to start a deal
  • No special barriers to begin with trading
  • Forex trading is available for 24hrs and 5 days a week

Conclusion

Forex trading is the best option if you have a low budget for investing as it is done with a low investment rate. Trading can be done at any time of the day. You can do it in your spare time through your mobile. Don’t worry about how to get started. To start the trading you don’t any barrier. Get set go!! Begin the race of trading and become a currency trader.

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