Let us first understand what is Forex trading online and what it involves? It involves transactions of exchanging one currency in terms of another foreign currency. The Forex market is the market where the foreign currency trading is done and is a decentralized global market. Except weekends the market is opened 24 hours a day. The value of one currency with respect to another is always changing and sometimes the fluctuations are small and other times they are bigger.
The main reason for the existence of the Forex market is that it facilitates international trade and investments through giving the ability to businesses to exchange one currency to another. A business in USA can import good from European countries and can pay in Euros or any other currency required. The FX market allows speculation and this adds higher liquidity to the market making the market rates less volatile.
What are the benefits of foreign currency trading?
After you understood what is Forex trading let us know about the benefits of Foreign currency trading. Some of the important benefits of trading online are:
- Forex trading needs only a computer or a smartphone and an internet connection today and you can perform the currency trade from anywhere in the world.
- It is relatively easier to enter and exit from a position due to high liquidity resulting from big volumes of trading in the Forex market.
- The trading hours are flexible and it operates 24 hours a day except weekends when the market is closed. The traders thus can choose the time they want and can perform the Forex trading as a side business.
- Availability of leverage in which traders can trade in higher volumes by depositing a minimal amount as the margin money. Many providers allow leverage as high as 400:1.
- As compared to stock and other forms of financial trading, foreign currency trading has only a fewer number of options to concentrate. These include 8 major currency pairs in which most of the trading is done in the Forex market.
- The start-up costs are low and it is easy to enter into the world of Forex trading online due to ease of accessibility today.
- The above advantages show that why this market is termed as the market close to an ideal of perfect competition. The daily turnover is seen as high as 3 trillions of dollars in the Forex market.
Who are the participants of Forex market?
- Central banks
- Large financial institutions
- Larger banks
- Retail traders
- Forex brokers
- Institutional investors
- Travelers and Tourists
- International corporations involved in trading internationally
Trading online at https://www.xtrade.com/ is a vast experience and for a beginner it is not just important to know what foreign currency trading is, it is also important to know the different strategies used in Forex to achieve profits successfully.