What Makes Forex Trading Unique

August 10, 2016 by  
Filed under Forex Trading

Forex is the acronym of Foreign Exchange. Forex market is the place where currencies from all over the world are traded. Why currency? Currency is important tool to conduct foreign trade and business. For example a businessman needs to buy the euro (EUR) to pay the imported goods. That means he has to exchange the equivalent value of U.S dollar (USD) into Poundsterling (GBP). Forex market is claimed to be the most liquid financial market in the world as the rapidly escalating need to exchange.

One can join the trade typically through a market maker or broker. To trade currency, one as forex trader can choose a currency pair for example USD-GBP. The forex trader purchases 500 GBP in June 2009. During 2009 the GBP’s value goes constantly increasing or upside down vs USD’s. At the beginning of 2010 $500 USD is worth 600 GBP. Well, that is just a simple example and description on how the forex market done. Actually the forex traders include huge ones like bank, company, governments, and financial institution.

There are some aspects that make Forex trading unique:
1. Forex trading neither manifest as physical market nor has central market exchange. This international huge market is conducted electronically or we can say an online internet market.
2. Forex trading does not have office hour. It operates 24 hour except the weekends. Yet there is bussy hour trading for example trading from 20.00GMT on Monday until 20.00 GMT on Friday.
3. Forex trading has low margin compared to fixed income.
4. The forex trader can use leverage to enhance profit with respect to account size.

Just like other kind of business, Forex trading has a risk too. Especially, the currency is more volatile market compared to the others. To deal with the risk trader should simply has trading plan.

Comments

One Response to “What Makes Forex Trading Unique”

  1. cancer star sign on September 27th, 2015 5:00 pm

    Excellent site. A lot of helpful information here. And certainly, thanks to your sweat!

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