What is Forex Trading | Revenu Trade Forex Trading Broker
Added: (Wed Jan 31 2018)
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What Is Forex Trading?
The foreign exchange market is the “platform” where the currencies will be traded. For most of the people, currencies are the most important thing of the life. But the currencies needs to be exchanged in order to conduct the foreign trade and the business. If you are living in the U.S and want to buy a dress from Japan, either you or the company that you buy the dress from has to pay the Japan Yen. This means the U.S importer will have to exchange the equivalent value of the U.S dollars (USD) into yen. A French tourist in the U.S cannot pay in euros to watch movies or to roam because it is not the locally accepted currency. The tourist has to exchange the euros for the local currency.
The necessity of exchanging the currencies is the primary reason is why the forex market is the huge one, a most liquid financial market in the world. It dominates the other markets size, even the stock market, with an average traded value of around the U.S $2,000 billion per day.
The unique feature of this international market is that there is no central marketplace for foreign exchange.Instead, currency trading is conducted electronically over the counter (OTC), which means that every transaction will appear through the computer networks between the traders around the world, instead of one centralized exchange. The market will be open for 24 hours a day, five and half days a week, and the currencies will be traded around the world in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris, and Sydney — around almost every time zone. This means when the trading day in the London ends, the forex market begins anew in Tokyo and Hong Kong. Thus, the forex market can be extremely active any time of the day, with the price quote which is changes constantly.
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Spot Market and the and the Forwards and Future Markets
There are actually three ways that the institutions, corporations and the individuals can trade forex: the spot market, the forwards market and also the futures market as well. The forex trading in the spot market is always been the largest market since it is the “underlying” real asset that the current and the future markets are based on. In the beginning, the future market was the most popular place for the venue traders since individuals were able to use it for a long time. Anyhow, with the benefit of electronic trading, the spot market has been witnessed a huge growth in activity and now crosses the futures market as the preferred investing market for individual investors and speculators. When the people refer to the spot market.
The spot market:
The spot market is where actually the currencies are bought and sold as of the current price. The price will be determined by supply and demand, it is a reflection of many things, including the current rates, economic performance, sentiment towards the ongoing political situations locally and internationally, as well as the insight of the future performance of one currency against another. When a deal is finalized, it will be known as “spot deal”. It is a bilateral transaction by which one the client delivers a specified amount of another currency at the agreed-upon exchange rate value. After the position is closed, the settlement is in cash.
The forwards and futures market:
The forwards and the futures market does not trade the actual currencies. Rather, they deal in contrasts that represent claims to a certain currency type, a particular price per unit and a future date for the settlement.
In the future market, futures contracts are purchased and sold based upon a standard size and settlement date on the public commodities markets, like Chicago Mercantile Exchange. In the U.S the National Futures Association regulates the futures market. Futures contracts have particular details, including the number of units being invested, delivery and settlement dates, and minimum price increments that cannot be customized.