If you are new to this platform you will find this short lesson by XFR Financial Ltd helpful in understanding what is Forex trading and other valuable things about the Forex market.
What is Forex Trading?
Forex market is a foreign exchange market which is a worldwide, decentralized and over-the-market for trading the currencies of different nations. Forex market is the biggest financial market in the world with more than 3 trillion dollars traded every day. The total volume of Forex trading in a single day is more than three times the combined volume of stocks and markets traded in a day.
History of Forex Trading
After that you have got some understanding of what is Forex, let us go over the history of Forex trading. Traditionally retail investors could gain an access to the Forex trading only through banks that transacted big amount of currencies for investment and commercial purposes. After exchange rates were allowed to float freely in the year 1971, the volume of Forex trading has increased rapidly. Today there are many players in the field of Forex trading. It includes importers, exporters, multinational companies, speculators, day traders and hedge funds. They pay for goods and services, trade in financial assets and hedge their exposure in other markets to reduce the currency movement risks.
Features of Forex Market
There is no central place for the currency market and the trading is conducted over the counter. The FX market is open 24 hours a day and is closed on the weekends. The foreign currencies are traded all over the world and the major financial centers are London, New York, Tokyo, Zurich, Sydney, Paris, Zurich and Frankfurt.
The Forex rates change continuously and the movements in the rates are caused due to actual monetary flows and anticipations for macroeconomic changes. The market participants are commercial traders and speculative traders.
Advantages of Forex Trading at XFR Financial Ltd
There are many advantages of Forex market and therefore financial traders at XFR Financial Ltd find it useful to trade in Forex.
- Forex market offers more reward/risk opportunities when compared with other ways of financial trading.
- The Forex market is open 24 hours a day. Therefore it offers best flexibility to any trader who wants to trade in it. Those who work in other streams and trade part time, can find the flexibility very useful and can trade when they get time in a day.
- High level of liquidity due to massive amount of transaction on a daily basis.
- No one can dominate the market.
- You can start-up with low initial costs in Forex trading and therefore it is very easy to start in Forex trading.
- Using leverage feature, traders can benefit even from the small movements of currencies.
- Focus can be made because there are 7 to 8 major currency pairs only which attracts most of the trading volume in Forex. Therefore traders can concentrate more because there are small number of options as compared to thousands of stocks in stock trading and other modes of financial trading.
As a beginner at XFR Financial Ltd it is not just important to understand what is Forex but you also need to understand its tips and strategies too. Those who trade with strategies succeed in the long run.