The forex market is an online over-the-Counter electronic market for the trading of foreign currencies. This marketplace normally determines international exchange rates for each currency traded. It includes all aspects of trading, buying and selling currencies in determined or current prices. It also involves transactions in the forex market such as buy and sell transactions. Forex is basically the exchange of currency between two countries.
The five trillion dollars forex market are currencies of countries around the globe. Some countries that are major players in forex trading are China, Japan, India, Germany and the United States. These countries together account for about half of the total volume of the forex market. This is because most of the trade is made between currencies of these countries. The other half is made by trading the currencies of other countries.
The forex broker in the forex market can make you leverage. This means with just one trade your currency can be leveraged up to three times of its value. You can use this leverage when you are looking to trade a single currency or you may be trading multiple currencies and you want to leverage the exchange rate to achieve more profits. Leverage also allows you to reduce losses.
Many of the forex brokers now also have mini accounts which can be used for forex trading. These mini accounts may only hold a couple of currency pairs like the USD/JPY or the EUR/GBP. These are ideal for people who are still learning about forex trading and don’t wish to risk losing their whole investment. These smaller accounts give the trader more leverage and allow them to test the waters first before going full scale with larger investments. You can also trade these smaller currency pairs on your own for fun before going for bigger ones.
To make sure that you are not losing money on the foreign exchange trading, you will need to learn how to pick the right currencies to invest in. When looking at currencies, you should try to analyze them both physically and in terms of the market trends. You will need to be keen in making the right decision in picking the currencies to invest in. If you are knowledgeable on the different technical indicators that are present in the various currency pairs, then this will help you decide which are the good ones to invest in and which aren’t.
The third most popularly traded pair in the forex market is the EUR/USD. The EUR/USD stands for the Euro and the US dollar. This is the base currency that is always traded on the Forex market. The reason for this popularity is that the euro is widely traded on the market and the USD is the base currency that is most easily available and accepted in other countries. Because of this, when you trade in the Forex market using the EUR/USD, you are using a safe base which has less risks associated with it compared to the other two pairs.