Forex trading is becoming very popular all over the world. Forex market being one of the largest financial markets provides a great opportunity for many traders to earn money in a short while. Unlike stock market it does not have any centralized market. It is the market which deals with the buying and selling of various currencies of the world. A newbie in this market will often arise with the question – what is forex trading? For them it is not easy to understand about forex trading and how forex market operates. The following article reveals the basic information on what is online forex trading.
When concerned with the working of forex online, it operates 24 hours a day. As we all know this market deals with the exchange of currencies, yet no physical exchange of currency takes place. Currencies are always quoted in pairs, yet the main purpose of any forex trade is to swap one currency for another in the hope that the market will move and prices change such that the currency that you buy rises in value in relation to the currency which you sell. The first important concept of this market is that each trade involves two currencies- the currency which you buy and the currency you sell. This gives us our first two important trading terms – the long position and the short position.
Let’s discover the simple concept of open and closed position in forex market. When you take a long position and purchase a currency in the belief that it will raise in value, you open a position. When you sell that currency later to generate profit you close the position. The same is true when you take a short position and open that position by selling a currency in the belief that it will fall in price and later close the position when you purchase the currency back at the lower price. Yet in the forex market, currency exchange rates always fluctuate. When we look into the explanation of forex trading online, the major participants of this market includes central banks, private firms, national banks and hedgers.
When you are trading you should be well aware of the news and events that will affect the price of the currency. There are certain factors that affect the exchange rate like economic factors including the interest rates and inflation, political factors. The major factor that affects the fluctuation in the rate of the forex is the surplus or the shortage of any particular currency. Now that you know how it works you can open an account with Juno markets opinions and start trading and making some good money.