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What is Forex and Forex Market Trading

Published on 17 February 2021

Forex is also known as FX, refers to the marketplace therein several currency derivatives, and currencies are exchanged. The Foreign Exchange is known as Forex.

 

What is the forex market?

The Foreign Exchange is known as Forex Market or FX Market. It is a global decentralized and words most traded currency market.

The FX market ordains every currency FX exchange rate. It comprises all prospects of purchasing, selling, and trading currency at decided or current costs. As the currency trading volume, it is a world’s biggest market on the globe. Almost over 5.1 trillion currency traded in a day and over 180 different currencies available. All currencies are divided into two classes, major pairs, and exotic pairs. However, most traders use US Dollar, euro, Australian dollar, Japanese yen, British pound, Canadian dollar, Swiss franc, and New Zealand.

 

Who controls the Forex Market?

This is a brilliant question! Most of the time newbie asks the question. It is a completely decentralized market. There are no controllers or managers of the market. But there are a lot of participants includes central banks, hedge funds, investors, governments, corporations, retail brokers, investment banks, commercial banks, and vacationers.

 

What is forex trading?

The forex market can be described as a network, where members are buyers and sellers around the globe. All participants exchange currency between each other at a determined price. It means participants covert currencies to one into another.

 

How does forex trading work?

When trading forex, means you are buying or selling currency. It called a currency pairs such as you selling US dollar against Grate Britain Pound, the pair will be USD/GBP. Here one is a base currency and another one is a counter currency.

 

What are the Benefits of forex trading?

Now, Forex trading is very popular. The following benefits are made forex trading popular:

  • 24 hours trading from Sunday to Friday.
  • Wide range of most liquid markets.
  • The ability to trading by using high leverage.
  • The transaction costs are low.
  • Profit expectationfrom Falling and Rising Prices.

 

Risks of forex trading

The tough forex market is decentralized and has a lot of advantages, there are additional risks. The currency prices are not stable, constantly fluctuating. The most 5 risks you need to consider:

  1. Leverage Risks
  2. Interest Rate Risks
  3. Transaction Risks
  4. Counterparty Risk and
  5. Country Risk
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