Forex trading – The term Forex is basically an abbreviation for “Foreign Exchange” also known as “FX” in the market place where currencies are traded. Currency has become the most important part of doing business nowadays and many people around the world don’t realize this. If you need to buy a product from overseas, first and for most, you have to buy using that foreign currency to which the product will be coming from as such a trade in currency occurs during the transaction.
So the need for Forex trading is exactly the same reasons when someone buys a product internationally. You buy one currency while at the same time selling another, meaning you are basically exchanging sold currency for the one you’re buying. FX has become a global decentralized market place which happens between traders without any middle man. The exchange of this foreign currency usually happens over-the-counter (OTC) which means that all transactions will happen via computer networks between traders around the world.
Why trade Forex?
Forex trading has become the most popular market on the international scale there by offering traders various benefits and advantages. FX trading goes on all around the world for 24 hours per day in every country’s business hours. This means traders don’t sleep when there’s something they can catch at any time of the day or night. There are also no limitations on currencies, unlike other financial markets where it can be difficult to sell short, with FX you are welcome to sell what suits your budget and think it’s worth the moment.
Forex trading offer the very low trading costs, there are no expensive exchange fees or licensing fees, transactions are always between the buyer and the seller which the trading and commissions are spread across both. FX makes a turn over of close to $5.3 trillion-a-day market, there are lot of people trading each day, even though most of it is focused on the few popular currencies. This makes it easier to get it and out of trades at any time you choose.