Whenever you want to buy goods or services from any other country of the world, you need to do this in terms of the currency of the country to which you are making a deal. For example if you live in Japan and want to buy a product from USA, you need to convert Japanese Yen into US dollars and then only you can buy any good or service from USA. The most important thing to note is that 1 Japanese Yen will not be equivalent to 1 US dollar. But there is an exchange rate and that keeps on changing slightly due to various market factors involved. For example 1 Yen = 0.0083 US dollar at one time and other day it can be 0.0081 and so on.
What is foreign currency trading?
These continuous fluctuations in the exchange rates of different currency pairs lead to a popular way of trading called foreign currency trading also known as Forex trading or foreign exchange trading. This way of trading is very popular in the world today and with the coming of internet and online trading it has touched the new heights in the field of financial trading. Fast trading, easy access and opening an account for online trading will provide the features you need from the trading platforms today. To start foreign currency trading today you just need to open a Forex trading account with a reputed broker and you are all set to go!
It is the largest financial market in the world with more than 4 trillion dollars traded each day across the world. Since it is the biggest market with high amount of transactions, it provides high liquidity to the traders in it. They can easily enter and exit a trade. Though there are many currencies in the world there are eight major currencies USD, EUR, GBP, JPY, CHF, CAD, AUD and NZD. The majority of the trading volume in Forex market takes place due to transactions of pairs belonging to these major currencies.
In equities and stocks, there are thousands of possible choices to choose from but in foreign currency trading there are only a few currency pairs to choose which makes Forex trading less complicated than other ways of online trading.
What are the benefits associated with Forex trading online
Forex market is the biggest financial market in the world and therefore it provides high liquidity to the traders trading in Forex field. There are many benefits associated with this form of financial trading. Here are those:-
- It is easy to enter the foreign currency trading field due to low amount of initial capital required. It can range to few hundred dollars
- Forex trading allows you to trade in high trade amount with less deposit amount known as margin.
- There are some seven to eight major currencies and therefore less number of currency pairs to deal with. This lower number of options allows less confusion as compared to stocks and equities which have thousand options to trade.