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Investing in the forex market : Things to know

Investing in a FOREX Market:


Things to Know
 

The currency market or Forex (FX), is among the largest markets in the world and accounts for more than $4 trillion average traded value each day. It comprises of commercial companies, banks, central banks, hedge funds, investment firms, and retail investors. Buying, selling, exchanging and speculating on currencies constitutes the activities of the Forex Market. There are some things that an investor must know before investing in a Forex market.
Here are a few things that you should know about the market.

1.   
The Forex trading is a 24-hour cash market where trading occurs in currency pairs. It is also a speculative market that relies on investors and traders betting on a particular currency to go up and vice versa. The currencies are bought and sold according to the current price or exchange rate. It is a place where currencies are traded.

2.   
It is a future market and involves institutions, corporations and individual trade, where stocks are bought and sold based on a standard size and settlement date. In simple terms, contracts are bought and sold between two parties, with predetermined clauses stated in the agreement between the parties. 


3.   
The option-holder has the choice to buy or sell at a future date without any obligation at a specified price in the future. He may thus handle money for a long time without having to worry about any other form of expense at his end.


4.   
Since this is a speculative market, no physical exchange of currencies takes place. All the transactions happen as digital entries in the name of the holder and this helps the holder exchange one currency into another for multinational corporations that need to trade currencies continually.


5.   
The forex market comes with huge returns as well as huge risks attached to it. However, many foreign currency exchange products which provide exposure to Forex markets are available, making it possible for the holder to associate himself with the market. It is a different form of an equities market and focuses on seven major pairs of currencies namely EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD & NZD/USD


6.   
Foreign currency Certificates of Deposits are available on individual currencies or and allow investors to earn interest at international rates. The trading also allows investing in the bonds of foreign governments that are denominated in the currency of the country of sale.

This fact proves valuable if the value of the foreign currency rises relative to the local currency of the investor, as the interest earned will also increase when the currency is converted.
These are only a few of the major details of this huge market, and in the digital age, every investor around the world can invest and make a fortune in Forex Markets by timely actions and proper market advice.

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