THINGS YOU NEED TO KNOW ABOUT FOREX MARKET
The forex market is a very lucrative market. It’s also among the most in-demand financial markets among traders who want earn quickly. There are good reasons for that. And if you want to try your luck in this market, you should know these essential facts about the forex market.
It has something to do with currencies.
The first and foremost fact you need to know about this market is that it works with the currencies of different currencies. The idea is to exchange a currency for another with higher value.
For instance, if you’re trading US dollars and Japanese yen, you can get some profits if the bought US dollars against the yen and the greenback’s value rises against the yen. This is the case for going long.
Currencies always go in pairs.
As indicated above, you will always buy a currency against another one. Currencies come in pairs, so we always quote the.
The first currency in a currency pair is called the base currency, while the second is the quote currency. For instance, in the USD/JPY pair, the USD is the base currency and the JPY is the quote currency.
You can go short in a currency pair.
Going short means you are betting that one currency will weaken against the other. In the example above, you are going long since you are speculating that the greenback will strengthen against the yen. If you go short on the dollar, you sell it in exchange of yen.
Going short in other markets, such as the stock market, is possible but it’s not as easy as when go short in the forex market.
The forex market is decentralized.
There is not a single exchange in the forex market, although there are different major exchanges around the globe. Compare this to the stock market, which is run by key exchanges.
The forex market is the most liquid financial market.
The forex market has the most number of participants among the financial markets in the world. It averages trillions of dollars in transactions every day. This makes for very high liquidity since you can always rest assured that you can exchange your forex assets for cash whenever you want.
It’s very accessible.
Long ago, forex trading was only available to people and institutions with deep pockets, particularly individuals with high net worth. But with the advent of advanced technology, those days are gone.
Almost anyone now can trade forex in the comforts of their house and just by using their computers or mobile devices with internet connection. Online brokerages have sprouted like mushrooms all over the world.
You can enjoy very low fees.
You can open an account for as low as $25 by using the services of online brokerages. These brokerages don’t usually charge commissions. And if there are any, they’re usually very low fees compared to how much you can gain.
If you’re wondering, online brokerages earn their keep from the spreads of trades. The spread refers to the difference between the bid and ask prices of the trade.
