Understanding of Forex Market

Author
/ December 27th, 2018
WHAT IS FOREX MARKET?

What is the Forex Market?

Forex Market is an online global network used to buy and sell currencies with a daily turnover of $5.1 trillion. It provides facility to trade 24 hours a day and 5 days a week where banks, individual traders, financial institutions and companies can participate. It is the leading sector which is growing rapidly after the stock market.

There are two major tiers in the Forex Market; the first one is an interbank market where currencies of different countries are exchanged by the biggest banks. The other one is the over-the-counter (OTC) market where companies and individuals can trade.

WHAT IS FOREX MARKET?

Being an OTC market, there is no centralized exchange that charges you for opening trades. Only the cost you bear is spread price of your broker, which is the difference between the bid and ask price for a specific currency pair. The major advantage of the Forex Market as compared to stock is no commission or extra fee on opening a trade.

Forex Market is very popular because of the highest number of participants all over the world. So, it has high liquidity that’s why large orders are easily full filled in an efficient manner. If you are a beginner in the Forex world then trade only in major currency pairs. In Forex Market, there is a range of currency pairs available by the brokers. Many of the brokers offer to trade between 40-70 currency pairs.

When involved in the Forex world, the trader makes sure about the understanding of the key features such as charts, indicators, Forex News, strategies for trade to earn a sufficient amount of profit. Many traders feel fear and get confused by conflicting information on the charts at different time frames. Make sure the weekly and daily charts are synchronized.

Trading in the Forex world, you are interested in the important economic releases of any county to trade with. The economy of the country mainly depends on unemployment, interest rate decision, inflation, industrial production, and many other factors. Investors can’t sleep because they are attentive about the fluctuations in the Forex Market.

Many traders review the economic calendars on a daily basis for the currency pairs they maintain positions in. Fundamental news analysis when combined with technical analysis, provides you the minimize surprises while trading. With the economic releases, the market may become temporarily volatile only to settle back towards the original trend. This is the reason that traders want to avoid trading on days. When markets are closed on the weekend then study weekly charts to look for the news or patterns with the Forex News and perform the analysis.

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