Forex trading, which stands for the Foreign Exchange Market for currencies, is basically the exchange of one currency for another at a specific price. It is decentralized and by far the largest in the world in terms of volume of trading with an estimated daily turnover of $5.3 trillion.
“Essentially, people are selling one currency and simultaneously buying another one with purely speculative purposes and the main goal is to predict the price changes and profit from it.”
According to Mr. Miroslav Paulo owner of forex blog there is a lot of risk involved in forex and it is strange that only small percent of traders will make real profits within first year! Actually more than 90% of novice speculators will loose all their money. And that is hell of a lot of money if you compare forex to other investing assets like commodities for example.
What influences the market price ?
There are many factors that influence the prices on the market, but the most important are politics, huge investment flows, and rapid changes in economical environment.There are two key factors which are behind FOREX trading’s popularity and global success.
- The first one is that it runs 24/7 without a break, which means trading is always open and there are no periods in which the prices change dramatically with the exchange being closed.
- The second one is the so called leverage – it means users are required to deposit just a small percentage of the amount they are trading with.
This gives the opportunity to smaller players to join the game, while in the past currency trade was only open to banks and other big financial institutions.
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