You can call it by any of these names - foreign exchange, foreign exchange or foreign exchange. They all describe the trading patterns of major currencies in the world. Today, the foreign exchange market is considered to be the world's largest trading market, with daily trading volume of about 1.5 trillion US dollars. Increase the amount of activity in all domestic exchange transactions, even if the average daily foreign exchange volume exceeds this total value. Forex trading is also worth a hundred times more than the daily trading volume of the New York Stock Exchange (NYSE). Most of the activities in this market are speculative, with a small portion representing government and banks, and basic currency conversion needs.
The foreign exchange market has a fundamentally different operational nature in the "interbank" market, rather than operating through a central exchange like the domestic stock market. The similarities in the natural foreign exchange market are over-the-counter or over-the-counter markets. Transactions are conducted directly between the parties, whether by telephone or through electronic networks around the world. The main trading centers are Sydney, Tokyo, London, Frankfurt and New York. Because of the global network of trading centers, the foreign exchange market operates 24 hours a day.
In the early days, foreign exchange trading was a monopoly of financial giants and some selective big time dealers. But globalization and the Internet have opened up the market to ordinary traders with a keen sense of speculative trading. In addition to a keen sense of intuition and predictability, the first trader needs some basic training on the main terms of foreign exchange transactions.
Basic Foreign Exchange Terms:
Spot:
The foreign exchange market is described as a spot market because transactions are "live" resolved immediately. In real life, this is equivalent to two bank working days.
Spreads
You sell currency in the market through "bidding", and you can buy these currencies by "inquiry". The spread is the difference between the price you sell for and the price you purchased. Under normal market conditions, you will find a professional spread of 3 points.
Point
As mentioned earlier, you will often encounter such a scenario, that is, the difference of 3 points when trading professional. It is the basic unit for measuring the change in cross-prices. Consider this example, where EURUSD is quoted at 0.9875 and quoted at 0.9878. The difference is $0.0003, which is equivalent to 3 "points."
Margin trading
Foreign exchange is usually traded on margin, which is much higher than any other stock movement. In the foreign exchange market, you can enjoy up to 100 times the margin.
Base currency and variable currency
In the foreign exchange market, you always trade a combination of two treaties. For example, you will buy dollars and sell euros. This means that you must speculate on the comparative advantages and weaknesses of any two treaties.
For those who dare not take risks, the foreign exchange market is a perfect choice. However, when you are fully educated in this area, you will be in a position to take risks. Your basic minimum education in this field should begin with a clear understanding of the above terms of foreign exchange trading.
Orignal From: Minimum requirements for successful foreign exchange trading education
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