A Look Into Forex Trading
Forex trading is a great way to make some extra cash on a part-time basis. This method of trading, also known as the currency market or Foreign Exchange, offers high liquidity and a 24-hour market – extra resources!
It was created to meet the demand and supply of currency for banks and other financial institutions. Although it is not that different from what it was, its size and accessibility have grown tremendously.
Like cars, computers and stocks, as well as other products and services traded in the open market, currencies also trade on an exchange. Currency value fluctuates according to the variations in demand and supply. The value of the currency falls if there is a drop in demand or an increase in supply of certain currencies on the market. The value of a currency will rise if there is a decrease in supply, or a demand increase. Retail investors traded forex via banks in the past, up until the mid-to-late 1970s.
The rapid growth in trading volumes led to a change in how currencies are traded. Investors were exposed to the new, more advanced trading platforms. Since then, forex trading has been a lucrative business for many. People can now use forex software online, account managed forex, and book forex. If you are serious about making money in the forex market, you should take full advantage of all the online tools available for free.
How does the forex market work exactly? In forex, currency codes are assigned three letters. For example, the US Dollar has a code of USD, while the British Pound’s is GBP. Trading is done in pairs, so two currencies will form a code of six letters. You will encounter the most common currency pairs, such as EUR/USD and GBP/USD. Exchange rate is the process of exchanging one currency for another. The base currency of a pair is the first one, while the other is called the ‘term currency.