What is Forex Trading? Why Choose it?

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Forex Market

The Forex market is one of the largest markets in the world which is responsible for currency exchange working 24 hours 5 days a week. The word Forex itself is a combination of two words, Foreign Exchange.

Forex Trading

Forex trading is defined as;

“The exchange of currencies in the Forex Market is called FX trading”.

As it is clear from its name, this legit market allows the traders to exchange their currency at a global level.

In this article, we are going to dig up about the FX Trading, history, facts, and the products offered by this market.

History of FX trading

By looking in the past, Forex trading was taking place in different ways. A flashback in the past shows the evidence of FX trading in the old Egyptian culture. It started emerging with time. However, the proper and developed trading in the Forex Exchange market happened after 1971 in the United States of America. Later, different countries took their part in the FX market on quite a serious basis.

Is Forex legal in all countries?

The answer is no. Forex trading is not legal in all countries. Some countries have several kinds of restrictions on FX trading. However, in some countries, it is officially banned.

Just like in the United States of America, Forex trading is allowed. The main restriction is that an American citizen cannot start FX with any broker residing outside of the US. AN involvement in such activity is considered as money laundering in America. There are also some restrictions in China, Pakistan, and India. They can only trade with their local broker. However, Forex Trading is completely banned in North Korea. European countries, Australia, and Canada are totally restriction free. They can work with anyone and anywhere.

What to Trade?

In Forex, you can trade a variety of products. Forex is a currency of an economy that you trade with the other currency. In Forex, you can trade currency pairs and currencies.

The most frequently used currencies of the World are.

  1. The Majors
  2. The Minors
  3. The Exotics

These pairs include a variety of currency crossed with each other. You will find more about them in our other articles regarding the basic education. If you think that you can only trade currency in the FX market, then you are wrong. Forex trading includes many financial instruments that are currency options, currency futures, CFDs (Shares, commodities, indices, Index, crypto, etc.), ETFs, retail forex,  spot FX.

Fun Facts about FX Market

Everyone has been through some interesting tidbits in your science books. Now it’s time to know about some figures and facts about the Foreign Exchange Market.

  1. The United States Dollar (USD) is the first currency introduced in the FX market to float freely.
  2. The Forex Market generates revenue of almost $5 to $6 trillion daily according to last year reports.
  3. The New York Stock Exchange (NYSE) is the largest productive market, generating $21 billion to $22.5 billion daily on an average basis. However, devastation on a massive scale by COVID-19 has affected all the financial markets of the world by lowering their production of business and revenue by FX.
  4. There is a misconception of people for Forex and Bitcoin.
  5. The most frequently and heavily traded pair of FX is EUR/USD.
  6. Approximately, 35 to 41 percent of brokers in FX Market belongs to the UK.
  7. Most traded currency in the World is USD as 86-87 percent trades are executed by this currency.
  8. The second-largest currency traded in FX trading is the Euro has a percentage of 31.4 daily.
  9. The most important factors affecting the currencies are the inflation and interest rates.
  10. Forex trading is highly volatile and liquid.
  11. You can use a lot of risk controllers.
  12. Most people thought that the FX market operates 24/7. But this is not true. Forex trading is executed 24 hours a day but from Monday to Friday.

Why to choose FX trading?

Although, Forex trading is a double-edged sword but still there are some valid and charming reasons to adopt this business. Some people have FX as their major or main business. But most people gave their second priority to FX.

Why to choose

Do you know?

Among the 66.65 million population of the UK more than 4 million people are involved in FX.

Here are some incredible reasons to know for opting Forex trading as a business.

Diversity in Market

Forex Market is the largest market having large offerings. Although there are some restrictions in some countries e.g, CFDs in the US and Cryptos are officially banned in Pakistan. Still, there is always much more to explore and utilize. You can trade thousands of products including currencies, options, futures, and many assets.

Flexible Timing

Unlike the Stock Market, the FX market operates for a full day without a single second of rest. This factor does not sound valuable. But the 24/5 working makes a person stress-free. A person feels free as he knows he has consecutive five days to think or work on a trade without facing emotional breakdown or depression. However, the weekend is also free in FX trading.

High Volatility

The Forex Market is highly volatile. The fluctuation rate is greater than in other financial markets. Due to its volatility, there is always a chance to cover up the loss and vice-versa.

Verdict

Forex Trading is legal and has a scope of betterment. For these reasons, one must try an FX.  In the future,  there are chances that people will prefer Forex trading as compared to other businesses.

Forexrupees.com provides educational and consultancy services to the clients interested in Forex Trading.