Forex is the conversion of one currency into another. Thus, it is one of the most actively traded markets in the world. An average daily trading volume of dollar five trillion takes place daily.
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Currencies are traded in lots – batches of currency used to standardise forex trades. As forex tends to move in small amounts, lots tend to be very large: a standard lot is 100,000 units of the base currency.
Traditionally, forex transactions take via a forex broker, but with the rise of online trading, you can take advantage of forex price movements.
The spread is the difference between the buy and sell prices quoted for a forex pair. If you want to open a long position, you trade at the buy price, which is slightly above the market price.
Leverage is the means of gaining exposure to large amounts of currency without having to pay the value of your trade upfront. Instead, you put down a small deposit, known as margin.
Foreign exchange (forex, or FX for short) is the marketplace for trading all the world’s currencies and is the largest financial market in the world. There are many benefits of trading forex, which include convenient market hours, high liquidity, and the ability to trade on margin. Learn more about six of the advantages of forex trading below.
The foreign exchange market is open 24 hours a day, five days a week – forex can be traded from 9 pm Sunday to 10 pm Friday (GMT). These hours are because forex transactions are completed between parties directly over the counters rather than through a central exchange.
The FX market is most liquid, meaning that there are wide varieties of buyers and sellers looking to make a trade at any given time. Each day, over 5 trillion dollars of currency gets converted by individuals, companies, and banks.
The high volume of currency trades each day translates to billions of dollars every minute. The price movements are of some currencies extremely volatile. You can potentially reap huge profits by speculating on price movements in either direction.
Trade Soft Offers a way to trade foreign exchange pairs using CFDs. CFDs are leveraged, which can make your money go further. Leverage in forex enables you to open a position on the currency market by paying just a proportion of the value.
Hedging is a technique that reduces the risk of unwanted moves in the forex market. Although volatility is part of what makes forex so exciting, hedging can be a good way of mitigating loss or limiting it to a known amount.
Some of the unique features of Forex trading are as follows
The foreign exchange market is the most dynamic in the world. Regardless of which instrument you are trading – be it stocks and foreign exchange, or any of the countless others – the attributes that determine the viability of a market as an investment opportunity remain the same.
Price transparency is very high in the FX market. Thus, the evolution of online foreign exchange trading continues to improve the benefit of traders. One of the advantages of trading foreign exchange online is to continue trade directly with the market maker
The dollar is the most traded currency that is often used in Forex trading. More than 87 percent of the global foreign exchange transactions takes place using this currency only.
Just take a look at our financial terms that can help you understand trading and the markets.
Be aware of the risks associated with forex trading and understand how Trade Soft supports you in managing them.
Discover the different platforms that you can trade forex with Trade Soft.