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Things You Should Know About the Forex Market

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  • Things You Should Know About the Forex Market

    Compared to all other futures and stock markets, the foreign exchange market is the largest financial market in the world. This market is commonly known as the forex or FX market. People from all over the world are welcomed to trade in this market. And, this market is incomplete without forex brokers. In order to trade in this market, you need to have a trading account. It is not that difficult to trading forex account. You need to have the required knowledge about this vast market. Selecting a broker is quite a time-consuming task. There are some things that you need to know before selecting a broker.

    Size of the market
    Size does matter in case of the forex market. Everyone does not receive access to the same prices and quality of execution. This is mainly because of the fact that the foreign exchange market is an over-the Ėcounter market and there is no centralised exchange. Institutions that have the most solid finances and the largest trade volume have access to better prices and execution. Select a reputed and big broker, as they will be able to provide you more benefits, better prices as well as better execution.

    Orders
    • Dealing desk means, your broker will create the pricing and execute the orders on your behalf. Generally, the spread is fixed. This refers to the fact that the spreads are higher than average variable spreads.
    • Multiple banks stream competing prices via your forex brokers in known as No Dealing Desk. Here, your orders are executed by the banks themselves.
    Spreads
    • Fractional Pip Pricing
    Almost all the major currency pairs are quoted to four decimal places. This means, a pip would generally equal to .0001 or one basis point. The price is generally rounded down or up to the nearest pip, by forex brokers. But, nowadays, some brokers are offering Fractional Pip-Pricing. Spreads are now more accurate as well as tighter, as it adds an additional decimal place.
    • Scalping the market
    A large number of traders prefer short-term scalping strategies. Here, orders are placed inside the spread.
    Rollover
    The interest that is paid or earned on forex positions that are held overnight is known as Rollover. When you sell a currency which pays higher interest rate and you have to pay interest, is a Negative Roll. When you buy a currency which pays higher interest rate enabling you to earn interest, is a Positive Roll.
    Hedging
    With the help of hedging, you can simultaneously hold sell and buy positions in the same currency pair. In case you are not certain about the direction, the most effective way to trade in the market is to find concrete support and resistance levels. This way, you will be able to pinpoint levels where significant price action will take place.
    Customer support
    As the forex market is open 24 hours a day, make sure that your broker is also available whenever you need him or her.

    So these are the things that you should know before trading in the forex market.

  • #2
    good to know this sandyer. Thank you

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    • #3
      Thank you very much for your guideline! Really, Forex business is knowledge based business! In addition, for being a successful Forex trader we need to know basic and advance level of technical and fundamental analysis mandatory! If you are a new Forex trader, please donít try to make huge money by using only others trading strategy or system blindly!

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