Since past few years, the trade in currency has surpassed even the stock market with an approx trade value of US $2 trillion per day. In spite of it being such a big market, many of us are unknown about the basics of currency trading. Currency trading is a popular term for Forex trade or foreign exchange trading. It basically deals with the exchange of currency. Forex trading can be done 24 hours a day, five and a half days a week. There are no stock exchange centers for the currency exchange. It is done only over the online portals throughout the world.
It is essentially the most lucrative, active, and ever-changing market of all. In the case of Forex, one can say safely that money never sleeps. While the trading time ends in Japan, a fresh day starts for the trader somewhere in New York.
There are three ways to trade in foreign exchange, namely:
- OTC Market: Where the money is exchanged at the current price. The rate is not predefined in this case and is set by the rising and falling economies, political scenarios, etc.
- Futures Markets: It functions like a contract with prescribed size, settlement date, and rate which cannot be changed later. In this case, you are not dealing with hard cash that is no actual currencies are exchanged here.
- Forwards Market: Similar to OTC market, it is a contract between two parties to exchange the currencies over the counter at pre-fixed terms which can be like prefixed settlement date or probable price.
You can trade in Forex market using any of the above and enjoy the plethora of options given to you to make quick money. Forex is advantageous above all because of following reasons:
- High Liquefaction: Currency exchange is a free flow market where most transactions happen over the counter.
- Extremely volatile: Forex market is changing every minute with prices fluctuating according to the changing views of political leaders across the nations.
- Low cost of trading: You can trade at a very low rate compared to other stock market. In Forex, it is the spread that differentiates between the asked and bid price.
It is the most affordable market to enter. Just remember to trade only as much as you can afford. Using more than the capital you can trade is the only risk you find in Forex trading.
Owing to the online forex trading has become way easier to manage trading in different currencies. To trade in different currencies, you just need to keep track of the worldwide happenings, an understanding of different economies and specially the economies of the currency in question. Doing so puts you in the commanding seat to play with your decision.
The above given is a brief overview on Forex trading. To understand this market system more, you can go online and search for the various Forex portals. Some recommended online support portals would be iFOREX help centre (link: http://support.iforex.com), FXDD foreign resources (link: www.fxdd.com), and Forex trading guide (link: www.fxcm.com/).