Trading currency in simple terms means currency trading. The currency trading market is the largest financial market in the world with a daily trading volume of more than $ 2 trillion. This is far more than just a $ 50 billion transaction that takes place on the New York Stock Exchange. Currency trading, in other words referred to as Forex or FX, which is short of foreign exchange.
Every country in the world has currency and this currency has their own value in relation to each other. These values are not permanent or permanent but still fluctuated for several reasons. The first reason for this is the presence of the real market. We live in open market scenarios where countries trade with other countries. In this case, the company and business companies that do business overseas need to send and receive payments to and from other countries. Demand and supply of these currencies then lead to changes in value. Another reason for fluctuations in currency value is speculation. In recent years, the second reason has become the main reason for fluctuations in currency values because more traders enter the currency trading arena with the intention of generating the benefits of changing the value of the currency.
Trading currency, up to several years ago was limited to major financial conglomerates and banks. This is considered the forex market drive. However, with the advancement of recent technology and the inclusion of newer financial instruments for trading has made the forex market available to retailers. Individual investors can now benefit from large returns available on the Forex market and it is also at a lower risk and without extra market knowledge.
Until a few years ago, the best choice for investing was the stock market. However, with stock markets around the world take a beating for various reasons, people have migrated to other financial instruments, Forex is one of them. Trading currency provides several benefits of traditional stock trading. Some of these benefits are:
Low spreads available in currency trading are good reasons for a trader to enter the market, because it costs low.
There are very good opportunities to get high profits because there are high volatility in the currency market. Therefore, a trader can produce high refunds with small price changes.
Leverage: Perhaps the most interesting factor, leverage is a facility using different financial instruments such as margin accounts to increase the possibility of return on investment. The leverage ratio for shares can be as high as 100: 1, while for the Forex market, the leverage ratio of 400: 1 is common.
Lower choice is useful: considering registered stock, an investor must choose from a large number of shares. For comparison, when foreign exchange trading with major currencies, the choice is limited to only five to six. Therefore, with a lower choice, a trader can maintain his focus and prepare his trade plan. He can concentrate on certain currency pairs and therefore do research and make progress.
Produce both ways: There is no limit to sell short on the forex market. This means that an investor can get both ways. He can be short or long. This means that there is a potential profit, even though a trader must remember that risk factors also exist.
There is no intermediary: stock trading must be carried through the broker. However, there are no intermediaries in forex trading. Because there are no central locations or markets for currency trading, all transactions are transferred through currencies that sell financial institutions. This is useful for investors because there are no additional fees and the agreement is resolved directly. Moreover, there is no commission by this broker because of their accusations included in the offer / a