Benefits of Forex trading

Forex trading benefits

FOREGIN EXCHANGE is the largest market in the world with daily turnover of up to 2 trillion dollars.

Forex is the OTC market (over the counter), it means that it has no physical counterpart such as banks or stock exchanges, it is a market where trading between market participants (banks, brokers, companies) takes place through network trading systems and its basis There are transactions between banks and financial institutions which create iterbank ie the interbank market.

Forex operates 24 hours a day for 5 days a week. Trading day starts in Sydney after Singapore, Tokyo, Frankfurt, London and ends in New York.

What do you need to know about Forex?

Forex is a relatively young market dating back to the seventies when it finally freed exchange rates from gold prices. Since the exchange rate of the currency began to determine the forces of demand and supply, the Forex market was born, which from the very beginning of its existence was and is the fastest growing financial market in the world.

Until recently, Forex was a market reserved only for the global financier, however, with the development of new technologies and in particular the Internet more and more people could actively participate in the fastest growing financial market in the world. Now anyone who owns a computer and access to the Internet can invest in the fastest growing market in the world.

Forex, in addition to being the largest financial market in the world, may also pose a danger to the currencies of individual countries - just look at what happened after the 2001 WTC attack in a few hours. The dollar literally fell against other currencies, or take for example, the average behavior of our buck in the last few years. The speculation on the zloty led many companies as well as ordinary people (foreign currency loans) to great losses and often to bankruptcy. These simple examples show us how powerful the market is Forex.

Forex is a bilateral market ...

This means that we can earn as the course grows and its decline. The ability to play the ups and downs is due to the construction of the rope itself. So when investing in a given currency pair eg EUR / USD, we assume that its exchange rate will increase or pile, depending on our assumption we buy or sell, but how to know how currency pairs work?

Let's take a pair of EUR / USD in this case the euro is the base currency against the dollar denominated currency - it means that the price of the euro is priced in USD dollars - it works so that the higher the demand for Euro the higher the price against the dollar Or the more people exchange dollars in euros, the higher the EUR / USD exchange rate, and vice versa, if the EUR / USD rises for 1 euro we have to pay more dollars and vice versa if the rate falls for the same euro we pay much less.

Trading platforms through which we can trade on Forex offer us levers, ie the lever. This is necessary because the financial market is spinning huge sums of money and in order to perform any operation, we would need hundreds of thousands of dollars for forex without leverage. Thanks to leverage, you will need to fund your account, for example, $ 200 to start your Forex adventure.

At present, the most liquid in the market are:

EUR / USD - Euro / US Dollar

USD / JPN - US Dollar / Japanese Yen

USD / CHF - US Dollar / Swiss Franc

GBP / USD - British pound / US dollar

and gold.

Advantages of Forex

1. 24-hour rotation

The main advantage of the Forex market is the possibility of trading 24 hours a day from 23.00 on Sunday to 23.00 on Friday. This gives you the ability to immediately react to a variety of reports from the world that may impact the market.

2. High liquidity

Forex is so liquid market that there are always buyers and sellers with whom you can trade. Liquidity in the market, and in particular the main currency pairs, ensures price stability and low spreads.

3. Easy access

With the development of new web technologies and specialized trading platforms, access to the foreign exchange market is possible for everyone who owns a computer and access to the Internet. Just $ 200 dollars to open an account and trade Forex.

3. Forex bilateral market

Forex gives you the opportunity to make money not only during the price increase, but also during the fall.

3. Lever

 Some commercial platforms offer you leverage as large as 200: 1. This means that with your own funds amounting to $ 200, for example, you can trade $ 40000. If at this leverage the odds change by 1% then you earned $ 400 or twice the initial capital.