The currency market also known as Forex market or foreign exchange market is a most liquid and fast paced market around the world. In past, Forex trading has been the domain of central banks, corporations, hedge funds, financial institutions and extremely wealthy people. Due to the emergence of internet, now it is possible for even a small investor to buy and sell currencies easily through online brokerage accounts.
Currency trading market is one of the least volatile markets around the world because the currency fluctuations are very small and most of the currency pairs move less than 1% per day. Therefore many traders use the leverage to increases the movement of currencies. In the retail Forex market, the leverage can be as high as 250:1. Although high leverage can be very risky but because of deep liquidity and round-the clock trading,currency exchange brokers provide high leverage to make the movements meaningful for the traders.
Availability of high leverage and extreme liquidity have encouraged the market’s rapid growth and made it an ideal place for a large number of traders. Currencies can be traded easily with a single click of mouse. In other words, it is easy to open and close position within seconds or the traders can hold position for months. Currency prices depend on supply and demand. Since the size of the currency trading market is very big therefore prices of currencies cannot be manipulated easily even by the big players like central banks.
The currency market offers good opportunities for the investors. In order to succeed in currency trading, a trader has to know the basics behind currency movements. Before participating in the Forex market, traders should have good knowledge of market’s history, exchange rates and key concepts. In addition, they should also know how to start trading. They should also know different types of strategies that can be used while trading currencies.
Being a daily trader is not the only way to participate in the Forex market but you also participate in this market every time when you travel overseas and exchange your home currency with foreign currency. In fact, the currency trading market is the largest financial market, dwarfing other financial markets around the world. In spite of its big size, the concepts of trading currencies are simple.
In stock market, the traders have thousands of stocks to choose from but in Forex market, you have to follow only eight major economies and then find which will provide the best opportunities. The eight major countries that make up majority of trades in foreign exchange market are: United States, Japan, United Kingdom, New Zealand, Australia, Canada, Switzerland and Euro zone (Germany, Italy, France and Spain). These countries have the largest financial markets in the world. By strictly focusing on these economies, a trader can earn a good amount of money from this most liquid financial market.
All these countries release economic data almost on daily basis, allowing the traders to win the trades by assessing the economic health of each country.
No comments:
Post a Comment