Business Finance

What it Means to Trade at Forex

The concept of the Forex market is much wider than just a piece of space where market participants trade different currencies. Forex market includes all currency transactions (buying and selling them) worldwide. Forex trading involves a great number of currencies, but the most widespread of them are the British pound, US dollar, Australian Dollar, Japanese Yen, Euro, Swiss Franc, Canadian dollar, and New Zealand Dollar. A currency deal occurs when the currency exchange transaction is made. So, if the Euro is determined by its comparison to the US dollar, a currency pair appears – EUR/USD. In this case, the Euro is the major currency, while the US dollar is the quote currency.

Why do the traders aspire to work at Forex? Of course, they want to earn money there. The currency resale is the basis for earning money on the Forex market. The matter is that you should try to buy a certain currency at a low price and sell this currency at a high price. Also, you can do the opposite. Anyway, a trader should pay money to a Forex broker for the provided services. The rest of the money is a profit of the trader. There is also an alternative way for people who want to work at Forex. Such people may try to build their career as a private Forex trader, which means without the assistance of a brokerage company. This can help you to cut down expenses, as you don’t have to pay your broker. So, if you earn an appropriate sum of money, you receive exactly this sum. But you should understand that in this situation only you are responsible for what you do at Forex and to which result it may lead. 

It’s clear, if you succeed in your trading activities, you will raise your funds, and if not, then you can lose even what you had. The second variant is not for you and to avoid it, you have to use leverage. This mechanism is used if you don’t have much money on your account but want to make a currency transaction at Forex. Using leverage allows a great number of traders to take part in trading on the financial market. The smallest leverage on the market is 1:1000. So, the brokerage company plays the role of a financial sponsor for a trader. Having, for example, $1000 on the deposit, you will not receive a big profit. You need a broker who supports profitable leverage for you. The number of operations on your Forex account influences your potential profit. 

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