Forex Basics
By TechGuy - November 13, 2017
What is the Forex market?
The Forex market is the world’s most
exciting and dynamic market. With $4 trillion traded every day, it is also the
largest financial market in the world. Forex (or FX) stands for ‘foreign
exchange’ which a traveller will know as the currency that you buy when
visiting another country. For example, you may sell euros and buy dollars for
your trip to the USA. The online Forex market is, however, 90% speculative,
which means that you don’t take possession of the actual, physical currency.
Rather, you open and close deals and make either a profit or loss which gets
reflected in your online account. The Forex market is an over-the-counter (or
OTC) market which means that trading takes place directly between two parties
without dealing through an exchange. This means you can conveniently access the
virtual market online anywhere in the world. What is the Forex market?
Unique features:
The forex market has several advantages
over other types of trading, such as traditional stocks:
Liquidity: The
high volumes traded globally lead to high liquidity. The big advantage of
liquidity is that you can always find demand to sell or buy the currency pair
you wish.
Increased leverage. Leverage is when you ‘borrow’ money so that you can use a small
investment to get a greater yield. Most stock markets offer 1:2 leverage. With
forex, 1:100 and higher is common. This means your opportunities for gain are
greatly enhanced. Remember though that your risk increases too.
Increased opportunities: Forex market conditions can change at any time in response
to real-time events. While you must be aware of the risks such changing markets
can pose, remember that volatile markets also offer high profit opportunities.
Easy access:
At easy-forex you can start trading forex with a low first deposit. You can
fund your account with a debit or credit card and start trading within minutes.
No commissions: easy-forex does not
charge you a commission. Instead, as the market maker, we make our money from
the spread (i.e. the difference between the buy and sell price), as well as any
rolling fees if you have kept a trade open overnight.
Controllable risk: Forex traders set a stop loss which means you set the maximum amount you
are prepared to risk. At easy-forex we guarantee your stop loss on our
platforms.
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