Know Your Forex Trading In Modern Way

Hey dude !! Have you ever traveled overseas? If your answer is yes, you’ve successfully done a forex transaction! If you’re wondering what a  'forex transaction’ is, it’s high time I broke it down for you. Forex is a popularly used term in the world trade market which stands for- foreign exchange. It’s simply explained as the exchange of currencies among different countries.

For example, when you decide to go to France, you must convert your dollars into euros following the exchange rate of the respective day. The exchange rate is always changing depending on the supply and demand of the currency. If you get .80 euros for $1 today, don’t get frustrated to see it getting down to .55 euros tomorrow! Changing the rate at a consistent manner is a very common nature of forex trading. 

How does Forex work?

Trading at forex involves nothing but buying and selling of two different currencies. It includes a pair of currencies such as- EUR/USD where the first one’s called the base currency and the second one is the quote currency. The base currency always has a value of 1. If the quote currency is 1.4113, it means you will require $1.4113 to exchange it into 1 base currency.You must have a clear conception of the frequently used forex terminologies to understand how forex actually works. The forex 101 needs you to know about ‘spread’ and ‘pip’ in the first place. Spread is the difference between the buying and the selling price of currency and pip is the amount of profit made in each trade.

Let, you want to buy Euro against USD. If your trading platform shows 1.4331x 1.4335 as the current price, it means the trade is going to be executed with 3 pips spread. A forex broker makes money from this spread. The amount of spread may get smaller or bigger depending on the risk the broker wants to take. However, some brokers may offer zero spread trading which is hardly found in reality. When makes pricing and gives you any price that he wants, you may find no spread there but he actually takes a certain amount from you in some way!   

Let me give you a real example of forex trading with respect to EUR/USD currency pair. Since euro stands on the first place, the exchange rate will indicate the amount of US dollars needed to purchase one euro. If you think the value of euro will increase against dollars, you will buy euros with dollars and vice versa. Now, you can make a huge profit by selling the euros back upon raising the exchange rate. 

Why is forex the best trading system? 

 Foreign exchange or forex trading has become no. 1 choice for the investors around the world since it comes with some amazing features that dwarf other trading systems. Let’s discuss on that-

1. High earning potential

Forex let the investor’s trade for over $2 trillion in different currencies every single day! This huge volume of the transaction has made forex the biggest and the most liquid financial market around the globe. Here, you can enjoy unlimited earning potential and run a perfectly stable financial business.

2. Forex is always there

It never sleeps and promises to be with you 24/7 anywhere, anytime. By using a popular trading platform, you can ensure instant execution of your command sitting at the home or the office. Though they are open from Monday to Friday, different time zones make them alive all seven days in a week. 

3. Low initial investment

You can be a part of forex even though you’re short of a huge amount. You can start with as low as $300 to start trading with this financial platform. It’s a golden opportunity for the new investors who want to test the market with a small capital.

4. Transparency of trading

Transparency in the forex markets is highly appreciable. Anyone can get information on the current trends or make a quick market analysis in this trading system.

With the help of a pure STP broker, a trader can directly interact with the liquidity providers e.g. banks to make quick execution of his order without engaging a dealer. It makes a platform for a transparent dealing between the client and the broker that brings great satisfaction.

5. Minimum commission/exchange fees

Forex trading involves very low commission or exchange fees, unlike other investment opportunities. Brokers may also offer ‘no commission’ trading with forex! The only fee you have to pay is when there’s a spread between the buying and selling price.

6. Little to no slippage cost

Slippage is the difference between the expected price of a trade and the price at which it’s actually executed. For example- if you want to buy a share at $2.00 but the order’s executed at $2.50, the slippage cost will be 50 cents. Forex, with its efficient and strong marketing policy, is successfully ensuring little to no slippage costs while trading.

7. Zero withdrawal fees

The automated forex trading software allows a client withdraw any amount of money he wants without paying the withdrawal fees. Also, they don’t charge any maintenance charge for your account and you can keep every penny of the profit that they make you. 

At the eleventh hour forex don't say you that you will make 100% gainer in this section or not enchantment to theirs activities. You just used their tools, platforms, regulation, requirements i.e for a better trading solution nothing else.