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Some Basic Facts About Forex Trading

Currencies / Forex Trading Jan 18, 2021 - 12:14 PM GMT

By: Sumeet_Manhas


There are some interesting facts that you may not have heard before about currency market and forex trading.

Forex or FX is short for the foreign exchange market. It is a global currency market where one can exchange national currencies against each other. For example, if you have a $100, you can exchange it to EUR, GBP, or just about any other currency based on the rates of the exchange.

There is a number of reasons to exchange money. Some exchange to travel, some exchange to safeguard the value of their investment while some others exchange currencies in the form of forex trading to earn a profit. As currency pairs change values constantly based on demands, supply, as well as geopolitical and economic factors one can make profits buying a particular currency for less and then exchanging it back when the price rises.

In this article, today, we try to find out some interesting facts about forex trading that you may or may not have heard before.

Forex trading is open 24/7

Due to being a global market, FX trading remains open all the time. To be precise, it remains open as long as there is a currency market open somewhere in the world. As different markets are in different time zones, you can buy, sell, speculate and exchange currencies 24/7 in all weekdays. Although it remains closed over the weekends, the weekends are squeezed for the same time zone differences.

Forex markets have high liquidity

In the financial market, liquidity means the ability to convert an asset into cash. Hence, high liquidity in the forex market means the ability to exchange a large amount of money from one particular currency to another in no time. It results in tighter spreads, and thus, incur lesser costs to buy, sell, or speculate.

Forex is an over the counter market

If you think about stocks and commodities, you know all the trading and investment activities happens via a stock exchange. The same doesn’t apply to currencies. Instead of requiring a stock exchange, forex exchange occurs directly between two parties. If you have a buyer, you can sell, or vice versa. This system is popularly called over the counter (OTC) market.

Currency trading is highly profitable

Due to being offered in a pair, you can earn a profit no matter whether the value rises or decreases. You just have to speculate in the right direction. If you think one currency would rise in value against the other, you can buy. If you think the reverse would happen, you can sell or go short turning in some profits either way. FX trading also allows leveraged trading to maximize your profit.

Forex market can be traded online

Thanks to several reliable online forex trading platforms, you can now trade on different currencies right at the palm of your hands. All you have to do is to find a reliable platform, open an account and start trading after making a deposit.

By Sumeet Manhas

© 2020 Copyright Sumeet Manhas - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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