The Forex market, also known as Fx market, or Currency market, or Foreign exchange currency market, or Foreign currency market is the common global platform where the bank, businesses, government, investors and traders deal in currencies by exchange or speculation. Exchanging currency is very important for the countries to carry on the foreign trade and businesses
So, forex trading refers to the buying and selling of currencies in the Forex markets with the intent of making profits. For example: If you think that GBP will become strong against USD in the near future, then you can buy GBP at low prices and sell it when it becomes strong. But, you can also lose your money if the USD goes strong against GBP. This is also called Speculative Forex trading which is very risky also if your assumptions do not go right.
The best thing about the forex trading is that there is no dedicated marketplace for foreign exchange. You can conduct the trading electronically over the internet with the traders located around the world on one centralized exchange platform. The currencies are majorly traded worldwide through one of the financial centers located in New York, London, Hong Kong, Sydney, Paris, Tokyo, Zurich, and Frankfurt.
The Forex market is one of the world’s largest and most liquid financial market, with over 4.9 trillion US dollars’ daily activities. Also, the forex market is open for 24 hours. So, here are few of the reasons why forex trading is gaining popularity:
- 24 hours trading allowed:
Forex market is open 24 hours 5 days a week in almost all the time zones of the world. So, you can trade anytime of the day in the major currencies as something or the happening through the day and night.
- No limitations:
Unlike other markets, there are no limitations on going long and short in the forex market. So, you can buy and sell currencies anytime.
- Low trading costs:
Forex trading is relatively cheaper than other markets. There are low commissions and no hidden costs involved.
- Global exposure:
Forex markets work at international levels. So, when you trade in forex you get global exposure since you deal with people on a global level.
- Increased leverage:
With such a huge volume of activity in a day in forex market, you can enjoy financial leverage if you want to trade with larger lots.
But, the rewards in the forex trading market come with a very high risk. So, you need to keep your emotions aside while trading in forex.