What is Forex?
The forex or the foreign exchange market is the biggest and the most liquid financial market in the world. Dwarfing other markets in size, including the stock market, the forex market has an average traded value of around $5 trillion per day – a figure that’s constantly on the rise.
Currencies facilitate foreign trade and business. If you live in the US and need to make a purchase from another country, you can only do so by exchanging US dollars into the currency of the country you’re making a purchase from at the current exchange rate. However, the global forex market operates on a much larger scale, involving MNCs, exporters, importers, hedge funds, and even individuals. While for some it provides a means of doing business in other countries, to others it provides tremendous opportunity to profit from favorable movements in the exchange rates.
So, if you’re new to Forex, you might be wondering: what makes it different from the stock market? Forex is all about trading in currencies, whereas the stock market involves trading money for shares. While the underlying principle to making profits in both markets is similar: buying low and selling high – the difference lies in the high liquidity of the forex market and the ease of going long or short, depending on the market scenario.
Here are a few facts about the forex market you should know if you’d like to venture into trading:
The sheer size of the market:
Owing to its massive size, it’s nearly impossible for anyone to control or manipulate the market. The average daily turnovers are so huge that it would take thirty days of trading on the New York stock exchange to equal that of one day on the Forex market.
Trades can be made non-stop from 20:15 GMT, Sunday until 22:00 GMT, Friday, thus, offering a 24/5 availability to facilitate trades from across the globe.
High liquidity of the market:
The Forex market is highly liquid which means that the amount of buying and selling volume at any time is large. This makes it easy for traders to buy and sell currencies.
No centralized marketplace:
There is no centralized market or a physical location as is the case with stock exchange markets. The forex market is deemed Over-the-Counter(OTC) considering the fact that the entire market runs electronically. There is also no centralized regulatory control with any regulation restricted to locally administered bodies.
The volatility and liquidity of the forex market can be used to make big profits out of small investments. At WesternFX, you can trade with a leverage as high as 500:1 or trade with lower levels of risk; the choice lies with you.
It’s an Open market:
You don’t have to be a seasoned forex trader to make huge profits. If you want to venture into the trading realm, you can get started with as little as USD $25 at WesternFX and get all the advice you need from our experts.
Are you ready to take your first step into forex trading? Create an account with WesternFX today!
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