Information About Currency Trading
Currency trading…. The purpose is to make a profit from currency trading in the foreign exchange market, which is called the forex market, because this market represents the source of foreign exchange and foreign currencies, and it is the largest and most liquid financial market in the world.
According to the latest Bank for International Settlements report, with average daily transaction volume exceeding US$5.1 trillion, this is the national central bank of the world bank.
Currency trading method
Currency trading is based on the principle of selling one currency in order to buy another.
This is why this process is always expressed in currency pairs.
For example: (GBP/USD) includes buying the British pound and selling the US dollar.
Please note that the symbol used for each coin is three letters long.
The first two letters abbreviate the name of the country, and the last letter abbreviates the name of the currency.
When written in English, it appears on the left side of the currency pair.
The first currency listed in a currency pair is called the base currency, while the other currency displayed to the right is called the quote currency.
The exchange rate of a currency pair can be expressed as a unit equal to the base currency in the quote currency, in order to profit from forex trading.
For example, the EUR/USD currency pair represents the amount of dollars that can be bought for one euro.
Therefore, currency traders tend to buy euros with dollars.
The Americans, if they know that the exchange rate of the euro against the dollar will rise, they will sell the euro to take profit when the exchange rate rises.
In general, it can be said that currency traders buy currency pairs when the price of the base currency increases relative to the quote currency.
They tend to sell currency pairs when the price of the base currency decreases in relation to the quote currency.
Advantages of forex trading
Many novice and professional currency trading investors like to trade in the foreign exchange market.
Because of its advantages in favor of currency trading, the most important of which are:
*. The largest financial market in the world: easily accessible from all over the world.
*. Everyone can use the potential of the market: both large and small investors can.
*. Individuals and companies trade through the market, as it does not necessarily require a large amount of initial capital.
*. Market size and permanent liquidity: The huge size of the foreign exchange market led to an increase in liquidity.
*. Which is beneficial for foreign exchange trading operations at any time without financial obstacles.
*. Decentralized financial markets: No party, no matter how important, can control the exchange rate.
*. Due to the size of the market and the large number of participants, transactions are usually done directly, that is, there is no intermediary involved.
*. In forex trading, upside and downside profit: Participants can find and profit from trading opportunities.
*. Regardless of whether the price of a currency pair is high or low.
*. Trade at any time: Since the trading process starts from the Sydney session until the end of the New York session.
*. And then it resumes, trading takes place 24 hours a day, five days a week, 24 hours a day. Operations take place around the clock.
*. Commission-free trading: Most accounts usually have no commission, or if the transaction volume is large, the commission can be very low.
*. Possibility to open a free demo account: beginners or those who want to improve their skills can try the account without real financial risks.
*. You should study well for currency trading on a demo account before trading on real accounts because forex contains a lot of risks.
*. Which may lead to the loss of capital for the trader if it is done without a good study.