What is Forex Trading?
What is Forex trading? it is a market that allows you to buy and sell the currency of any country against another. The most popular currencies among Forex traders are the US dollar (USD), the Euro (EUR), the Great British Pound (GBP) and the Japanese Yen
(JPY). The USD is the most traded instrument, while the Euro is the 2nd. Thus the EUR/USD (Euro vs. the USD) is the most traded pair on the planet.
Do you think the Euro is going to rise vs. the USD, then you would buy it vs. the USD. Think its going to fall in value – then you would sell it vs. the USD. This is the basic mechanic of trading currencies
1. Simple to comprehend and master - In a Forex trade we deal with just a pair of currencies
2. Low Minimum Investment - The Forex market requires less capital to start trading than most other markets. The initial investment could go very low, depending on the leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level. Online Forex brokers offer "mini" and "micro" trading accounts with low minimum account deposit.
We're not saying you should open an account with the bare minimum, but it does make Forex trading much more accessible to the average individual who doesn't have a lot of start-up trading capital.
3. 24 Hour Market - Since the Forex market is worldwide, trading is continuous as long as there is a market open somewhere in the world. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.
4. High Liquidity - Liquidity is the ability of an asset to be converted into cash quickly and without any price discount. In Forex this means we can move large amounts of money into and out of foreign currency with minimal price movement.
5. Low Transaction Cost - In Forex, typically the cost of a transaction is built into the price. It is called the spread. The spread is the difference between the buying and selling price.
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Advantages of Forex Over Other Investment Assets
1. Simple to comprehend and master - In a Forex trade we deal with just a pair of currencies
2. Low Minimum Investment - The Forex market requires less capital to start trading than most other markets. The initial investment could go very low, depending on the leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level. Online Forex brokers offer "mini" and "micro" trading accounts with low minimum account deposit.
We're not saying you should open an account with the bare minimum, but it does make Forex trading much more accessible to the average individual who doesn't have a lot of start-up trading capital.
3. 24 Hour Market - Since the Forex market is worldwide, trading is continuous as long as there is a market open somewhere in the world. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.
4. High Liquidity - Liquidity is the ability of an asset to be converted into cash quickly and without any price discount. In Forex this means we can move large amounts of money into and out of foreign currency with minimal price movement.
5. Low Transaction Cost - In Forex, typically the cost of a transaction is built into the price. It is called the spread. The spread is the difference between the buying and selling price.
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