Facts Related to Forex Trading

by lokesh kumar

If you want to do Forex trading, it is just right to know how it works and how you can use it to your advantage in the market. The currency exchange market is highly popular mainly because it is open to anyone who desires to earn a good amount of money. Whether you are in New York or London, you get the chance to profit from the market. As a matter of fact, they call it, the market never sleeps.

More importantly, this decentralized market has been expanding hugely for so many years and its popularity is skyrocketing thanks to all the advancements in technology that we have nowadays. The market is now easily accessible to retail traders or those small-budget owners. Let’s check some more exciting things about the industry.

It Dates Back to Ancient Times

Yes, you read it right. The trading of currencies dates back to the old times. In fact, some currency transactions were recorded in the Talmudic writings. Back in the day, money changers are those who help other people in changing their currencies. Then, they take a commission for every successful transaction, to compensate for their services.

The Cable in the Forex Market

If ever you encounter the word ‘cable’ in the Forex market, it actually refers to the currency pair GBP/USD. The reason for this is because, when fiber optics and satellites were yet to be invented, the New York and London Stock Exchanges were able to get connected through the use of a giant steel cable that goes through the Atlantic ocean.

The Bulls and Bears

In the Forex market, the traders are being categorized as bulls and bears. Bulls are those traders that believe the market will go up while bears are those that are expecting the market to fall down. These names are basically derived from the fact that when the bull strikes, it’s always upward while the bear always swipes down.

$5 Trillion Worth of Volume

The Forex market has an astonishing worth of transactions per day. More than $5 trillion transactions per day are being made, greater than the ones made in the New York Stock Exchange. 80% of traders in the market are trading the US dollar.

Spot Trading

The term ‘spot trading’ can be heard in currency exchange. This term is used because the transaction happens ‘on the spot’.

The Entry of Retail Traders

Before, trading currencies were only for huge banks and financial institutions that can produce at least $40 to $60 million liquidated funds to finance their transactions. But nowadays, you can join the market for as long as $50 through the help of an online broker.

What is Pip?

Pip is a term very common in the market. It is the one-tenth of the pip or the 5th decimal located at the value of the currency. When you say, 1.17224, then the pip value would be 4.

Now that you know some facts about Forex trading, it is time to get familiar with other important things like trading platforms and risk management strategies. Make sure to understand these things because it improves your chance to profit in the market.

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