Forex! Let’s know what’s it about?

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Forex, the word itself gives a clue what it means: Foreign Exchange, where the currencies are traded. It’s all about money and exchange of money with different countries one to another in order to conduct business. For example one need to buy a product from another country, he has to pay to them in their currency, for that he will buy their currency and pay to them by selling his currency. Many profits are gained due to its high demand and flexibility. Banks can’t provide higher returns on savings, the better way of investing money and gaining high profits by trading. One can practice Forex prekyba by opening a Demo trading account without any risk for understanding its concepts easily. As it’s a round the clock business, one can start the marketing in less investment. Adding advantage is that one can buy and sell the currencies with minimal amounts in their account, which made easy for many people to trade. Actually trading is easy but it appears to be risk. There are Forex managed account services which makes you everything easy even If you aren’t aware of the process. Generally this is a complete online process and simple. Based on the fluctuations in the values of different countries, profits and losses are calculated. If the trading is done right, lot of money can be earned. There are well established markets all over the world to provide easy transactions. Getting educated about trading by different educators makes it easy to understand the market and to avoid risks. Learning and sometimes losing makes you skilled trader and increases the chances of getting profits in the long run. The trading includes banks, individuals, retail brokers, investors and companies. They trade in three ways: the spot markets, the forward markets and the futures markets.

Giving a brief explanation of these markets:

Spot markets are the largest markets where the assets are included and conversion to cash is quick. Forward markets is quiet informal and it gives the future delivery over currencies. Future markets are done by individuals over a product or service at specified price.

To be a successful trader one should have self control, confidence, discipline, dedication, logic, patience and vision. It has become widely popular in mid 1990’s and running extremely well till now. As the new markets are emerging, trading always had a great future.

Benefits from Trading:

  • Accessebility, in terms of less capital and high returns which makes trading beneficial for all groups.

  • Liquidity, where cash is converted easily and without price drop.

  • Flexibility of 24X5 shifts, where day long trading is done without confusion compared to stock markets.

  • The buying and selling of currencies with low transaction costs.

  • Easy transactions through credit cards and electronic banking make it simpler for converting money.

  • Providing experience through practice accounts unlike other markets, where full experience and knowledge are gained without much spending.

  • Leverage, which makes your trading size big with the capital size bigger.

  • High supply and demand in products and services makes the returns sure.

  • Decentralized system makes it simpler.

  • Provides freedom to trade around the globe with no restrictions.

  • Support from many brokerages to open the free accounts.

  • Due to its uncontrollable structure, opportunities are more.

  • Less investment and assets needed are a computer and internet connection.

Terminology:

Generally, to understand trading the terms used in the process should be understood well. Set of terms are particularly defined to make everyone run on the same path, which makes easy to calculate and estimate markets:

1. Pip: It is the smallest change in the currency pair.

2. Currency pair: Relates the currencies one over other.

3. Exchange rates: The value of one currency in other terms.

4. Cross rate: Indicates the currency exchange rates.

5. Margin: The amount used for opening the account or to maintain the position.

6. Leverage: Leverage is the ability to control the amount of money spending in trading.

7. Spread: It’s the difference between the selling price and the quoted price.

8. Ask price: The price required to buy an order.

9. Bid price: The required to sell an order.

10. Margin call: A warning issued to let the individual about the insufficiency in funds.

11. Equity: It’s the amount in your account including profits and losses.

12. Account currency: Currency in which you start trading.

13. Commission: A chargeable fee by the agent or broker.

14. Agent/broker: A middle man helps in carrying out transactions on behalf of others.

15. Hegde: It is a way to protect unnecessary fluctuations in the account.

Though there are many other terms to be included, these are important and used on regular basis.

Right time to trade:

Trading should be done at specific timings to get more profits. As per the studies, the best time to trade is 2PM to 6PM of Eastern times and 7PM to 11PM.Timings matters a lot as many people lose huge amounts by trading at wrong times. As there are many training platforms, one should get trained for the best in industry.

Due to high inflow of money in trading, many frauds have been emerging on the daily basis, where awareness should be created. Many countries have set up rules and regulations to control these financial frauds for sake of smooth economic flow. Still due to easy mode of transcation, online frauds are unpredictable.

Finally, markets are always subjected to risks, there are some cons involved too. The disadvantages are: Risk factor, Over Confident, Less education on trading, Fear, Commissions or brokerages, Price drops, fake identities and high volatility.

Bottom-line:

Due to assumption of easy money making, individuals always make trading as career objective. But without great knowledge and understanding, it becomes highly risky and results in losing valuables. Investment should be made with experience and on genuine firms to avoid frauds and lose. On the other hand continuous research and regular market studies can help one to achieve high returns on the investments.

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