What is forex and how to trade the market

What is forex and how to trade the market


What is forex: forex is an acronym for foreign exchange, it is the changing of one currency for another, this is the largest financial market in the world with a daily average turnover of over $5.2 trillion, US dollars, 30 times larger than the US stock exchange. Unlike other financial market, the forex market has no physical location or central exchange place. It is an over the counter market, where buyers and sellers, including banks, corporations and private investors like to conduct business continuously over a 24- hours period. (1)ORIGIN OF FOREIGN EXCHANGE: forex trading is not a new business, it has been going on since 1971 when what was known as the floating rate of exchange was introduced. For as long as different countries in the world operate different currencies and the need to do business with one another, then there is the need for foreign exchange. However, what is new about forex trading is the ability of the common man to participate. In the past , it used to be an exclusive, preserved for big banks and billionaires, because for every single trade transacted, there was a minimum of $1million required. This means that if one was going to transact in this sector and the minimum balance he has is $1million, then his worth must be several millions of dollars and must be able to satisfy many stringent conditions so attached. In this regard, forex trading has been going on since 1971 when Brenton woods introduced what is known as floating rate of exchange, where by the policy of fixing exchange rate was no longer tenable as a process, exchange rate is determined by the forces of supply and demand. However the forex market was deregulated in the year 1998 for the participation of traders with a minimum amount of $100 and below to be involved.

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E 22 Jun, 2020 25 views