to consider before investing in the Forex market
The (Foreign Exchange) Forex Market is the largest financial market in
the world. Currencies of different countries are traded in this market. The
estimated daily currency exchange is this market is 4 trillion dollars.
is nothing but foreign exchange. The exchanging of various currencies in the
world is carried out by currency trading in the money
This is a comparatively
unfamiliar ground for retail traders. Originally only the multinational
corporations and big financial institutions used to trade in this market. Now,
with the advent and popularity of online trading, individual investors are also
venturing into this market and find it fascinating and lucrative.
does the forex market differ from other markets?
Firstly, the forex market
consists of approximately eight important currencies of the world. This is
unlike the stock market where innumerable shares are traded daily. This ensures
a narrow focus and easy understanding of what is happening in the forex market.
However, the flip side is
that there is no central regulatory body overseeing the currency trading and
most of the trading is carried on based on credit agreements. Business here is
the largest and in liquid form.
Forex Market cannot be
is difficult to corner the market due to its colossal size. Even large
financial institutions are also unable to control this market over a long time
period. This makes it an ideal place for the small investors to invest.
of the terms used in Forex trading:
PIP is the "Percentage In Point" (PIP). It is also called as "Point".
It is calculated as the minimum price increase of a Forex trading rate. 0.0001
is the most common PIP.
price that you buy a currency at is the ask price. The market is agreeable to
sell the currency at this price.
price that you sell a currency at is the bid price. It is the price which the
market is agreeable to pay you for this specific currency.
is the difference between ask price and bid price.
rate of the currency against another currency.
your risk capacity, plan your goals, get a forex
trading account, select a broker carefully and start investing in the