Forex trading is a prominent investment destination as it fits all traders with different experience levels. However, trading in the forex market is still controversial to many due to the promising yet risky nature of the market. Some people actually think forex trading is a shortcut for being rich, but this is not how it really works.
What is the Forex Market？
The foreign exchange market, or forex market, is the most traded financial market in the world. The forex market is a global marketplace where financial institutions, banks, and investors can speculate on currencies. It is considered to be the largest and most liquid financial market in the world, with an average daily trading volume of $6.6 trillion. The forex is a decentralized market as all trading is done online, known as over-the-counter (OTC) trading.
What is Forex Trading？
Forex trading is the speculation on currency prices for potential profits. Since forex trading is primarily exchanging one currency for another, currencies in the forex market are traded in pairs. The currency pair is a quotation for one currency against the other; known as quote currency and base currency.Currency pairs are affected by differentfundamentalandtechnicalfactors that affect the exchange rate. These factors include economic policies, political stability, trade flows, and of course the changes in supply and demand.
Understanding Currency Pairs
Understanding the pricing and quotation forcurrency pairsis very essential in forex trading. Currencies are defined as the base currency and secondary quote currency.The base currency is the first currency in a currency pair. Also known as the transaction currency. Thequote currencyis the currency being used to pay for the transaction, and it is also known as the counter currency or secondarycurrency.
Read more Beginner guide's to forex market for more insights on the most traded currency pairs and how to trade forex effectively!!!
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