What is Forex?

What is Forex?

The Forex (Foreign Exchange) Market is the largest market in the world. It is the market where currencies are traded. Each day, more than 4 trillion dollars are exchanged.

Why trade Forex?

24 hour Market

The Forex market is open 24 hours a day, so that you can be right there trading whenever you hear a financial scoop.

Narrow Focus

Unlike the stock market, a smaller market with tens of thousands of stocks to choose from, the Forex market revolves around more or less eight major currencies. A narrow choice means no room for confusion, so even though the market is huge, it’s quite easy to get a clear picture of what’s happening.

Liquidity

The enormous volume of daily trades makes it the most liquid market in the world, which means that under normal market conditions you can buy and sell currency as you please.

The Market cannot be cornered

The colossal size of the Forex market also makes sure that no one can corner the market. Even banks do not have enough pull to really control the market for a long period of time, which makes it a great place for the little guy to make a move.

Simplicity

Use technical analysis (indicators on charts) methods from other markets like equities.

Basic Forex terms

Listed below are some of the key terms used in Forex and CFD/Share trading

Pip

A Pip is the “Percentage In Point” (PIP), sometimes also referred to as “Point”. It is equal to the minimum price increase of a Forex trading rate. The most common Pip is 0.0001.

Ask price

The ask price is the price you can buy a currency at. It is also the price at which the market is willing to sell the currency to you.

Bid price
The bid price is the price you can sell a currency at. The market is willing to pay you this price for this particular currency.

Spreads
Spread are the difference between bid price and ask price.

Currency rate
A currency rate against another currency rate.