Foreign exchange largely known as Forex or FX is the biggest economic trade market, as it deals with almost 2 to 3 trillion dollars each day which is far more than the amount being traded in any other exchange or stock market. . Forex market involves buying of a currency and selling off another simultaneously.
The big money market called Forex came to its existence, when the national currency of United States became unstable due to drop in gold standard, somewhere around early 1970. It was an era when banks across the world found hidden profit in the buying of weak currency and selling it after its gains its value.
Forex market is a whole new concept of trade with 24/7 exchange and no central office or address like stock market. Fact that transactions and dealings in Forex market are done via electronic medium like telephone, internet and mobile makes it known as OTC (over the counter) or ‘Interbank/Interdealer’ trade market. Trade or dealings on Forex market is done via brokers, banks, private firms or financial companies.
While the trading is done between two counterparts just like any other trade but in Forex market the trade is done in terms of pairs. Pairs mean the combination of two currencies as such that when you sell your currency against the other one; you get the value set on another one. Pairs in Forex are of two kind ‘Majors’ and ‘Minors’. While most of the traders like to deal with ‘Majors’ currencies, some of them are:
- GBPUSD (Pound/Dollar)
- EURUSD (Euro/Dollar)
- USDJPY (Dollar/Yen)
- USDCHF (Pound/Dollar)
Forex trade or Forex market has an inevitable reasons for pulling traders and brokers towards it, what makes FX a desirable market apart from it 24/7 working is the numerous benefits and advantages it offers to people. Following are some the reasons why one should invest in Forex:
Largest liquidity to support easy exchange of currencies
Tools for managing risk and
Tool for technical analyses
Easy online access from any part of the world
24 hours and 5 days of trading
With the huge amount of money and fluctuations present, FX is a serious business with no place for silly errors. Forex market is full of terms, factors and tools that need attention for earning profit and avoiding any loss, thus it is advisable to have a complete knowledge and understanding of the market before entering into it. You can always go for trading courses and education programs available on internet or books.
Dealing in Forex market means profit if done with proper care and calculation. Requirement of profitable Forex market trading are strategy planning, patience, research and analyzes and clam approach while making decisions. A good Forex trader is one who knows when to start and when to stop in trading, also a successful trader needs to have control over his/her emotions and greed. With so much of money being dealt profits and losses is a part of daily trade, thus a trader need to positive while dealing with both of them. Confusion, over confidence and fear has no place in the market of Forex trading.
Being the major financial market, Forex market is undoubtedly a roller coaster ride and a fortune earning platform if taken seriously.