The forex exchange is one of the biggest markets in the world. As per the survey by the Bank of International Settlements, the year 2013 saw the biggest volume traded per day, which was $ 5.3 trillion. While these numbers and stats must be familiar to the regular traders and the experts, other people might be confused. Here you’ll be getting answers to your questions and everything else you need to know about forex exchange.
- What is forex?
Forex exchange which is also known as currency trading is a market where all the currencies in the world are traded. Forex is the most liquid market with an average of $5 trillion trade volume per day. Have you ever traveled abroad and exchanged your currency with the local currency? If yes, you have done a forex exchange. The forex exchange rate decides how much local currency you get against your money. For example, how much US dollars you will be returned against Rs. 1000 depends on the forex rates, which continuously changes based on demand and supply.
- How to make a forex trade?
Forex trade involves a pair of currencies, and here you’ll be betting on the value of one currency offering against the other. EUR/USD is the most traded currency pair where the first currency is the base currency and the second is the counter currency and spread is the difference between the two currency values. Here all the profit/loss game depends on your prediction. If you think that the value of EUR is going to increase you buy EUR/USD otherwise you sell EUR/USD. The value of spread equals your profit or loss here.
- When is the best time to trade forex?
This depends on what type of trading you prefer. If you are a position trader or swing trader or you prefer forex exchange for longer time, when you trade doesn’t really matter. However, if you’re a short-term trader (daytime trader), you need to know everything about trading sessions and periods:
- Asian session
- London session
- New York session
These sessions change schedules in the summer period (April to October) and winter period (October to April). Here’s a small tip, London and New York session is where the trading volatility is highest and for most currency pairs Tuesday, Wednesday, and Thursday are considered most volatile.
Before you trade in forex, you need to be sure about your forex exchange skills. Many websites offer stock stimulators to test your forex trade skills for free, so you can take help of these tools and be confident about your skills before trading your real money. Honing your skills will bring lesser risk and lesser trading woes for you.