Forex trading has joined the biggest and lucrative avenues that can change one from grass to grace. It is one of the very few industries that offers tremendous opportunities to individuals concerned and they can expect to make a lot of money after sheer dedication and devotion. As a result of which the popularity of Forex trade has grown extensively in the last one decade or so. In this kind of financial trading, one needs to understand the basics of currencies and how it operates in the market. With little bit of information and training, one can start trading in the Forex in a very short span of time.
Forex Trading: Understanding the Basics
Forex trading is one such kind of trading where you purchase one set of currency in a given time and sell the other another after a certain interval of time. Take for instance, imagine that you have bought Japanese Yen and want to sell off US Dollars, then you would be trading in JPY/USD currency format. After a certain interval of time, there would be some changes in the exchange rate of Yen as compared to Dollar. So at the end of the trade expiry, you will either be experiencing profit or loss when you sell the Yen and buy the Dollars.
Suppose that you start trading and take that 200,000 Yen would cost you somewhere around $2,600. If the dollars happen to get weak over the time, your trade value is likely to increase. So when you sell off the Yen, you will be selling it at a higher price than what you have bought at the first place. It may be worth $2,800 which means that you will make a profit of $200 from this particular trade. Apart from dollar and yen, there are many other prominent currencies like GBP, AUD, CAD etc that one should definitely opt out for trading in the Forex market.
Brokerage Firms in the Forex Market
All the trades in this particular format of financial trading are carried out with the assistance of brokers available in the market. Brokerage firms are nothing but a middle person between the Forex and the trader concerned. Almost all the brokers have their own trading platform in order to carry out the trade by investing money in the assets. As a trader when you place an order from your account, the request for the trade is sent to an Inter-Bank Market which is not any type of physical establishment but actually a network of banks and traders who deal in various types of currencies.
Source: Steve Gardner
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