Understanding the rudiments of forex…
The foreign exchange market is a worldwide or over-the-counter (OTC) market for the buying and selling of currencies. It is otherwise known as “Forex”, “FX”, or “currency market”. It is simply the process of buying, selling and exchanging currencies at present or determined prices. Based on its trading volume, it is the largest market in the world being seconded by the Credit market.
However, the financial activities of the foreign exchange market are done on different levels. Basically, the forex market comprises two levels; the interbank market and the over-the-counter (OTC) market. The interbank market is one where large banks buy and sell currencies for the aims of hedging, balance sheet adjustments, etc; While OTC market is one where individuals buy and sell through online brokers. Foreign exchange market fosters international trade and investments by enabling currency conversion. The contemporary FX market started emerging in the 1970s.
How Can I buy and sell currency on Forex? Every forex trade involves two currencies. This is because involving in a forex trade means you are betting on the value of a currency against another. For instance, EUR/USD which are the most-traded currency pair globally. In this regard, the first currency in the pair, EUR, is known as the base, while USD is the second is the counter. It should be noted that when a price is quoted, it means how much is the worth of one euro in US dollars. You will always see two prices because one is the buy price and the other is the sell. Hence, the only difference between the two is the spread. As a result, once the buy or sell icon is clicked, it is tantamount to buying or selling the first currency in the pair. How to Identify the Best Online Forex Brokerage? The best online forex brokerage can be identified through the following:
(i). Regulation: You should take cognizance that not all bodies are created equally for international forex and CFD Brokers. Therefore, investors must know the country of their broker and their extant laws on individuals’ account.
(ii). Company Policies and History: investors should verify their firm’s regulatory licenses with the view of safeguarding their monies. Also, you are expected to review the customer agreements, read up on the company’s history, and make sure their primary offices are well known and established worldwide.
(iii). Order Type and Execution: there are some execution methods or order-types that may have negative implications for your trade. Against the backdrop that each broker is different, you should be well familiar with the order-type and execution of your broker so as not to run loss.
(iv) Customer Service: an effective and proactive customer care service is very important, particularly for a new trader. Although the quality of support differs across online FX brokerages, it is important your broker’s customer care is always available and accessible. Some globally renowned and reliable broker platforms include:
FOREX.com IG Daily FX research CMC Markets FXCM education TradeStation Group
Fortex Capital Marketing.