What is Forex trading – get to know all the essentials
Have you ever wondered what Forex trading precisely refers to and why it is getting so much popular lately? Forex trading has aroused immense interest among enthusiastic beginners, known to be among the most profitable online businesses.
First of all, you should understand that Forex represents an acronym of a global, electronic marketplace for international currency exchange. It excludes any physical location. The Forex market is, undoubtedly, the biggest and most liquid financial market on the planet.
The phrase Forex trading refers to the process of speculating currency prices to achieve profits potentially. It’s essential to understand that currencies are traded in pairs. Therefore, while the trader is exchanging money for another, he speculates whether one currency will rise or fall in value against another.
Let’s see what is the prominent role of a Forex broker, shall we?
Get to know the meaning of a Forex broker.
If you aren’t familiar with it, a good and reliable Forex broker like the FinancialCentre represents a financial service or a firm that allows you to buy and sell currencies. It’s like a middleman between the interbank and traders, which will enable you to trade foreign currencies.
To find a quality and reliable broker for your tradings, it’s essential to do proper research first and to make sure that a regulatory agency regulates your preferred broker and offers excellent account features to its customers, alongside a 24 hours available customer service.
How can you trade in Forex market exactly?
If you are eager to know how you can trade in Forex, you must understand that the Forex market is available to its customers 24 hours a day, 5.5 days a week, in all the globe’s major centers. It means that it’s a flexible market and that you, as a trader, are allowed to buy and sell cryptocurrencies virtually anywhere in the world, at every working hour.
Trading in the Forex market means that you are buying or selling a specific country’s currency, hoping there will be some strength and upward movement of the money you are purchasing.
Keep in mind that, without any exception, a currency is always traded relative to another currency. In case you are selling a particular currency, you are buying another one at the same time. The same rule applies in the reverse situation. Profit is being made on the difference between the transaction prices.
What are pairs, pips, and lots exactly?
As we have mentioned before, every currency trade is made in pairs. You must understand that there is a difference between the Forex and the Stock market. While you must buy or sell a single stock in the stock market, you need to go online and buy one particular currency and sell another in the Forex market.
When it comes to pips, almost all currencies are priced out to the fourth decimal point. It means that a pip, or percentage in point, represents the smallest increment of trade. Often, one pip is equal to 1/100 of 1%.
Another critical thing to remember is that currencies are being traded in various sized lots. There is a micro-lot, which is 1,000 units of a currency. A mini lot equals 10,000 units of your base currency, while a standard lot is 100,000 units.