WHAT BEGINNING TRADERS NEED TO KNOW ABOUT FOREX TRADING AND THE TRUSTED FOREX BROKERS

Have you thought of trading in the forex market but have no idea of how to go about it. You need to know that without the trusted forex brokers teaming up with you; you will face struggles when you enter into this business. We can begin with a brief understanding of what this type of investment called forex trading is all about.

Some Tips

Has there been any time you travelled to another country? It is possible that the country you travelled to use a currency that is different from the one you are used to. What this means is that in order for you to have engaged in any economic activity you must have converted your original currency to the currency of the country you have visited. When you exchange one currency for another, you have already participated in the best simple form of forex trading through the forex market.

The currency market is the principal financial markets you can find around the globe. The volume of its daily trade is over $5 trillion. However, the particular trade you will be dealing with is the retail forex trading which accounts for a trading volume of over $1 billion. The forex trading has been associated with different names like the foreign currency market, foreign exchange market, currency market, FX and a lot more. Unlike trading in the stock market, it doesn’t have a central marketplace. The trade typically takes place over the counter.

Those That Participate In the Foreign Exchange Market

The foreign exchange market has a range of participants we will look at here.


Banks

Banks trade between themselves making them take up a huge percentage of transactions in the commercial forex market. The volume of trades among the big banks reaches billions of dollars on a daily basis. Although apart from themselves, the banks also make the trades for their customers.

Companies

When companies buy goods and services from other countries they make use of the foreign exchange. The same applies when they sell their goods and services to other countries. The part they play on the market is daily.

Governments and Central Banks

They play a role in the rise and fall of the value of their currency and thus have a strong influence on the FX market. They also have huge FX reserves that they utilize to bring stability to the market. You can learn more at http://trustedforexbroker.com/forex-trading-101/.

Hedge funds

The bulk of transactions in the foreign exchange market are usually speculated. The main reason for transacting in FX is to speculate the fluctuations of a currency. Big hedge funds play a big part in the FX market because their controls and speculations amount to billions of dollars daily.

Individuals

They are the ones that do this in its most simple form, particularly when they travel to another country and exchange currencies.

Investors

Investment firms here are able to manage their clients’ portfolios, buying and selling in foreign securities.

Retail Forex Traders

You can identify yourself as a retail forex trader.This part of the industry is showing significant growth as each day passes because people know a lot more about trusted forex brokers online. They are getting the ‘know and the feel’ of it given the potentials and opportunity in it.

Forex Market Trading Has Its Benefits

When you trade forex online, it means you are not restricted to any country or region.

Get Familiar with Simple Forex Jargons

Exchange Rate

This is the value expression of one currency over another. For instance, if EUR/USD is 1.1122, then a Euro equals $1.1122.

Pip, Point or Points

This measures a currency movement. The smallest likely movement is one pip.

Margin

This is the needed amount that keeps a foreign trade or position open. The margin can either be free or used. The free margin is the amount that a new position can have and the used margin is an amount that is utilized to maintain an open position.

Leverage

With leverages, traders are able to gear their account to a point larger than their entire account margin. For instance, let’s consider a $ 400,000 position which is opened for a margin of £1,000 in the account that you trade with. The leverage we will be looking at here will be 400 times, as in 400:1. You should note that in as much as leverage can increase profits, it can also increase losses.

Spread

Spread in trading simply means the difference between the buy and sell price or the offer and bid price quoted. Normally the broker or market quotes the buying price for a particular currency pair. That is the bid price.




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