Last Updated on
For the finance market, the currency is the most important thing irrespective of the type and country. The deviation of rates between two different currencies is also a platform of trading with the help of which one can earn a lot. This type of trading is known as currency trading or foreign exchange trading which is popularly known as FOREX Trading. Those who are aware of the trend and sentiment as well as international political and other situations can have better chances of earning in this market.
Many people are familiar with the stock market and its operations. However, not many are aware of currency trading platforms. It is easy to trade different currencies in the FX Trading segment. The forex trading platform allows you to trade different pairs of currencies across the world. It is a huge market that overshadows both the stock market and commodity markets across the world.
How big is the forex market?
You will be surprised to know that this is the biggest market in the world. The maximum trades in the world markets happen in this segment. For this reason, you should never be missing an opportunity to trade in these markets. It has better liquidity than any other markets like commodity and stock markets.
The situation may differ slightly based on the economy and financial markets of any country. But, when you consider the overall volume of trade that happens anywhere in the world, this forex segment scores the highest rank. It is way bigger than the stock market of many countries.
Timings of the forex market
As the currency markets involve different countries, the market is literally open 24 hours. It is active in one or the other country at any point in time. However, it is usually closed on weekends and you can trade for 5 days in a week.
Traders get to enjoy flexible timings in this segment. You can trade as per your convenience and place orders for buy and sell when you are logging out of the trading portal. In this way, your money keeps working for you even while you are sleeping. All you need is a good trading platform that can provide you timely alerts and proper information about the currency markets in the world.
Understanding different currency markets
- Spot forex market allows you to physically settle the contract at the agreed price.
- Future forex market allows you to enter into a future dated contract that can be terminated any time before the expiry of the contract.
- Forward forex market is usually used by companies that have receivable in a different currency at a particular date in the future. They buy or sell the currency at an agreed price on a set date in the future.
Things to know before you start trading forex
Currencies can be traded in lots as prescribed by the exchange. They decide the lot size based on different parameters and you can trade-in as many lots as you want according to your capacity.
Limit orders allow you to place a particular price for buying or selling a contract. Market orders are used to buy and sell at the best available price in the market.
Pips are the numbers you get to see after the decimal point in the currency contracts. In normal cases, you might have seen two digits after the decimal points. However, in currency trading, the pips can go to even four digits.
Spread is the difference between the bidding price and the available selling price in the market.
How to choose the best broker for currency trading?
- If you are planning to enter into currency trading, you need the best FX Trading platform that provides a lot of benefits.
- You should typically look at brokers who provide a good margin for various pairs of currencies. This will allow you to enter multiple trades with less money.
- You should also calculate the brokerage rates and see if it is in a good range when compared to other competitors in the market.
- Different platforms are available for currency trading and you can choose them based on your convenience. Make sure that your broker provides a web-based platform along with a mobile-based currency trading platform. In this way, you will have the flexibility to use whichever option you want for your trading needs.
- Ask your broker if they provide charting tools to analyze the trading opportunities available in the market. This will help you to improvise your trades in the long run.
Demo account vs Live account
To begin with, you need to get familiar with various aspects of the currency markets as this is slightly complicated when compared to the regular stock markets. However, once you understand the terminology and concepts of forex markets, it will seem much easier than other markets.
In this regard, you can try the demo account offered by reputed brokers in the forex market. This will allow you to place virtual trades in the market which can be used for practicing your strategies. In this way, you can try your hand at trading even without investing real money. Make sure to try this for a few weeks till you get confidence to play with real money in the forex market.
Once you are confident about your strategies in the currency markets, you can open a live account with a reputed forex broker and start trading in this segment. This can bring you good profits in both directions if you are able to catch the trend in the proper manner. With good information about the markets, it becomes easier to handle fluctuations in the long run.
In this way, it is easy to make money with the forex market when you have good knowledge about this market. The best brokers will always provide you with the right platform and guide you with regards to your currency trading by providing tips and market information at the right time. All you need to do is to get in touch with the right service providers to start your forex trading journey.