Forex trading means the transaction in which one party exchange one currency with another currency. You can say that the forex trading is a business of foreign exchange market in which parties exchange currencies for the sake of profit. In foreign exchange market people invest in currencies that are high yielding and get their profit due to these high yielding rates.
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The Forex term was introduced in early 1970s by converting the fixed currency into the new artificial currency. Since then, the market is attracting many traders through beneficial strategies of different transactions. Forex trading is not just a central market, but it consists of thousands of trading institutes Government banks, multinational and local trading companies. That’s why, Forex is not related to any particular place and most of the Forex trading is done through the main and vital trading institutes and centers. As for example the most vibrant markets are; London, New York, Hong Kong, Singapore and Frankfort markets where a big community is involved in the Forex trading for the purpose of investment and business transactions. Apart from this, Forex market also welcomes small investors to try their luck in the business world. New policies are being established for ensuring easy approach towards Forex market that would be helpful for boosting the volume of business transactions and for the improvement of rules and regulations of Forex trading.
Benefits of Forex Trading:
The simple way to understand the forex trading is that if you entered in the market for the exchange of currency, it is forex trading. Due to the flow of currency, the value of money fluctuates, that’s why country’s economy hunts by various national, international level and people make money by this up down method. This speculation of money is called forex trading. There are several benefits of forex trading.
• One can get the higher yielding rates from the exchanges of money. Purchasing currency on a lower rates and then sale it on high rates makes you financially strong and also gives higher profit.
• Forex trading actually is a type of liquid market where you can deal in liquid money.
• Forex Markets works for 24 hours a day and 5 days a week.
• The easy availability of cash is another reason of forex trading that gives broker the chance to earn high profit by reselling the currency.
Misconception about Forex Trading:
There are many benefits of forex trading but there are also many misconceptions about this trading. When a new broker enters first time in the market without any knowledge or experience then there is chances fraud. Mostly people think that forex exchange and stock exchange are the different names of same business. But the reality is the forex exchange means exchange of the currency and stock exchange deals in every type of stock not only in currency.
The other misconception is that people think that forex is free from commission, which is wrong concept. You need a good broker for the purchase and sale of the currency and broker knows it well how to deal with it? The profit you earned has the share of the broker that share is known as commission.
So, we can say that there are equal advantages and disadvantages of forex trading. For forex trading there is need of accurate and timely information for the success.