The Forex Market is the biggest and most liquid market in the world but stocks get all the press. Have you ever traveled to another country and exchanged money?
Trading in the Forex Market is becoming more and more popular because it offers traders several distinct advantages over stocks, options, and futures..
Forex is a global market and is open 24 hours a day from 5: ET Sunday through 5: This is perfect for traders with flexible schedules, or for those looking to make money outside standard standard exchange hours.
Since forex is a multi-trillion dollar market with expanded hours, there are virtually no gaps, effectively bridging the gap no pun intended between day and swing trading. It is very easy to get in and out at will, no matter the time, day or night. Most forex accounts are commission free. Plus, there are no exchange, data, or platform fees.
The only cost you have as a forex trader is the spread, or difference between the bid and ask, which is always visible for you to see. That makes forex trading much, much cheaper than stocks, options, and futures.
Because the forex market is so liquid, brokers will extend you significant leverage — up to Just as easily as you can accelerate profits, you can also suffer accelerated losses. And when you get home, instead of exchanging your euros back to dollars, you decided to hold onto them as a memory. Forex trading in the markets works the same way. That was true years ago.
They fluctuate as supply and demand changes. And, remember, there are no restrictions! You can buy and sell at any time, day or night. There are two main ways to analyze strong and weak currencies: Looking at a forex pair for the first time may seem confusing, but it is actually quite simple. Honestly, the terms do not really matter.
The bottom line is, what any quoted forex pair tells you is how much 1 unit of the base currency the first is worth in the counter currency. Whenever you place a trade, long or short, you are doing so in the base currency. Conversely, if you were to sell short, expecting price to decline, you would be selling the euro and buying the dollar. Just like anything else, you want to buy low and sell higher, or sell short high and buy back lower. You are simply borrowing the currency when you initiate trades, and when a position is closed, your trading platform will do all the calculations for you.
The only exception is on Japanese yen pairs, which are quoted to the second decimal place. Forex is intimidating to many traders, but there is nothing that makes forex more inherently more difficult than stocks, options, and futures. And as I illustrated, it offers significant advantages in terms of costs, liquidity, and leverage. But if you want to succeed in forex, you must master a trading methodology and use a comprehensive plan.
The second currency is called the counter currency.More...