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What is forex ?
Foreign exchange, also known as foreign exchange, FX or currency trading,
is a decentralized global market where all the world’s currency trades.
The foreign exchange market is the largest, most liquid market in the world,
with an average daily trading volume of over $ 5 trillion. Not all joint stock markets of the world even come close to it. But what do you mean?
Take a closer look at forex trading and you may find some attractive trading opportunities unavailable with other investments.
Foreign Exchange Transport: Excellent in All
If you have ever traveled abroad, you have done a foreign currency transaction. Travel to France and you convert your pound into Euro.
When you do this, the foreign currency exchange rate between the two currencies, based on supply and demand,
determines how many euros you get for your pound. And the exchange rate fluctuates continuously.
On Monday, a pound can fetch you 1.19 euros. 1.20 Euros on Tuesday.
This small change may not seem like a big deal. But think of it extensively.
A large international company may need to pay foreign employees. Imagine what you can do for the bottom line if,
like the example above, just exchanging one currency depends on you on another cost basis when you do it?
They add some money quickly. In both cases, you as a traveler or a business owner – you can hold your money until the foreign exchange rate is more favorable.
Opportunities in Forex: What do you think?
you can trade currency based on what you think its value is (or where it is). But the major difference with Forex is that you can trade up or down easily.
If you think a currency will increase in value, you can buy it. If you think it will decrease, you can sell it.
With a market it is big, finding a buyer when you are selling and a seller when you are buying is much easier than other markets.
Maybe you will hear the news that China is devaluing its currency to attract more foreign trade in its country.
If you believe the trend will continue, you can trade foreign currency by selling the Chinese currency against another currency, say, the US dollar. The higher the devaluation of the Chinese currency against the US currency,
the higher your profit. If the Chinese currency price increases when your selling position is open, your losses increase and you want to exit the trade.
Past performance: Past performance is not an indicator of future results.
Creating a Business: How to Buy and Buy
You have an opinion now what? Open your free Forex demo platform and trade your opinion.
What is Forex, how to buy and sell currency
All Forex trades involve two currencies because you are betting on the value of one currency against another.
Think of EUR / USD, the most traded currency pair in the world. EUR is the first currency in the pair, the base, and USD is the second, counter.
When you see the quoted price on your platform, that price is equal to one euro in US dollars.
You always look at two prices because one is the purchase price and one is the sale. The difference between the two is diffusion. When you click buy or sell, you are buying or selling the first currency in the pair.
Suppose you think that the euro will increase in value against the US dollar. Your pair is EUR / USD. Since the euro is first, and you think it will go up, you buy EUR / USD. If you believe that the euro will fall in value against the US dollar, you sell EUR / USD.
If the price of a EUR / USD buy is 0.70644 and the sell price is 0.70640, the spread is 0.4 pips. If the trade moves in your favor (or against you), then, once you cover the spread, you can make a profit (or loss) in your trade.
Gain of a penny: TRADING ON MARGIN
If prices are quoted in hundredths of a cent, how can you see any significant return on your investment when you trade Forex? There is leverage in the north.
When you trade Forex, you effectively borrow the first currency in the pair to buy or sell the second currency. With a US $ 5-trillion-day market, liquidity is so deep that liquidity providers — big banks, basically — allow you to trade with leverage.
To trade with leverage, you set the required margin for the size of your business. If you are taking advantage of 200: 1, for example, you can trade £ 2,000 in the market, while setting aside a margin of only £ 10 in your eight accounts. For a 50: 1 leverage, a single trade size would still only require about 40 pounds in margin. This gives you more risk due to keeping your capital investment low.
But leverage does not increase your profit potential. It can also increase your investment, which can be more than the money deposited. When you are new to Forex, you should always start small trades with low leverage ratios, as long as you feel comfortable in the market.