What is Forex?
The Foreign Exchange is a decentralized market which is used globally to buy and sell many of the worlds most used currencies. It is an over the counter market, where the value of each currency is obtained sold and traded against each other. The Forex market allows the global exchange of money and is one of the fundamental ways in which economist determine the price of a currency.
The Forex system allows countries and large financial institutions to trade between each other in their respective currencies, for example, if an American company regularly imports goods from China, the Forex system would allow them to exchange American Dollars for Chinese Yen, so that both parties would, in essence, be able to trade regularly without the need to acquire the other parties currency.
Forex has revolutionized the global trade market and allows anyone to purchase foreign currencies easily and for the best value. Many traders have found great success using the Forex market for their day trading strategies, as the volatile nature of currency valuation is a great way to earn money.
Why Should You Trade With Forex?
When trading stocks and bonds, those without severe amounts of cash to invest are extremely hindered in their access and functionality of the stock market. Day trading limits stop those with lower prices of investment capital from buying and selling stocks over a day by day time period. Forex trading is not burdened with such requirements, and traders can buy and sell shares to their heart’s content.
Forex is also extremely understandable as opposed to stocks and bonds. However, the research can be just as intensive when making big financial decisions, and the currency market can be a lot easier to digest and comprehend starting off.
Forex is also great for beginners due to its extremely low entry cost. Many brokers will accept currency trades of extremely low value, and the commission is lower than you would pay for stocks and bonds.
Most currencies are valued to 4 decimal places, and the pip is the change in value that takes place at this level. The US dollar is priced to 4 decimal places; therefore, one pip would constitute a hundredth of a per cent.
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