Foreign Exchange or FX or Forex lays the foundation of all capital transactions around the world. In Forex trading, you can trade currencies. Economic and geopolitical events can fluctuate market value and affect the trade. Currencies are always quoted in pairs. The value of one currency is determined by comparing it with another. Daily transaction in the Forex market is more than $5 trillion in a day, making the Forex market the largest Financial market in the world. It offers many benefits to its traders such as convenient market hours, high liquidity and to trade on margin.
About the Fx currency quote:
The currency quotes contain two prices: the "ask" and "bid" rate. The ask rate is the price at which the market maker is willing to sell the currency pair. The bid rate is the price at which the market maker is willing to buy the currency pair. Here, the market maker is the market participant or a member firm of an exchange. The Forex term Spread refers to the difference between the bid and ask rates.
What is margin?
Very often, the need for a margin is misunderstood by the traders as a transaction fee for them. Margin is actually, a part of the trader’s account being set aside. This in turn, helps the trader to trade for larger amounts using smaller deposits. Another important aspect of margin is that, margin and trade size proportional. Which means that as one’s trade size increases, so will his margin need.
Here is what every trader should know
The Forex market changes every now and then. These changes depend on various economic and geopolitical factors. Trust Capital TC allows your trade positions to be leveraged. If you do not have proper risk management plans, then this leverage offered can have huge effects on your profits and losses. If it is a loss there is a high probability that it might even damage your financial well-being. Hence, it is very important that before you trade Forex, you should have a capital, which you are willing to lose.