Forex, short for foreign exchange, is the largest financial market in the world, and anyone can be part of it. It’s all about converting money from one currency to another at the right time to make a profit. Nearly $5 trillion dollars a day is traded, with several major forex-trading centres being open, 24-hour trading is possible. Each one is in a different time zone to facilitate this, and they are in locations such as London, New York, Sydney, Hong Kong, Frankfurt, and Tokyo. There is no one-market centre for forex, the rates being decided by the big banks in the different countries.
Individuals, companies, banks, governments, traders, hedge fund managers, and anyone else can trade in forex. The currency market is open to them all.
Forex Deals For Importing And Exporting Goods
Every time goods are imported or exported, a form of forex takes place. If something is being purchased from abroad it has to be paid for in a different currency. The timing of that payment can be crucial, as the value of currencies fluctuate all the time. Companies want to maximise their profits, and getting a good exchange rate for payments can make a huge difference to their bottom line.
In spite of the fact that trade between countries happens all night and day, this type of forex only accounts for a small portion, with most forex deals being on the open market to make money, often completed on platforms like Metatrader and through web and mobile apps.
How To Become Involved In Forex Trading
One popular way to start forex trading is known as spread betting. This involves you betting on how two currencies will fare against each other. If the one you select as the strongest is correct, your profit is made and the more the currency increases, the more your profit will be. By the same token, if the one you have bet on slides, then you make a loss.
A currency is affected by the country’s economy, or a piece of news, good or bad, can increase or decrease the value. There is news feeds specifically for the trading markets, as the effects of how a government behaves, or a natural disaster, can have a huge effect on the currency of that particular country.
You could also become involved in forex by CFD trading, which allows you to exchange the difference in price of a currency pair between the start and the end of your CFD.
If you are new to forex, there is much to learn, but having the support of a good broker can make all the difference. They will be able to provide guidance about the different currencies. With the freedom to trade anywhere in the world, at any time of the day or night, once you understand how to trade in forex all you need is a digital device connected to the internet.