Forex Trading: Definition and Benefits

Posted by Zandra Faye on February 11th, 2020

What is Forex?

Forex, or the foreign exchange market is the place where currencies are exchanged. At its simplest, a foreign trade might be when you exchange your local currency to a new one for a forthcoming holiday. An estimated 5.3 billion USD is traded every day among banks, corporations, governments, and speculators.

Understanding how the business is planned out is significant because the group combination of all members forms the market your trade-in. The corresponding influence of the trading party on the market is regulated by how much money that party controls. From billion-dollar boundary funds and investment banks to private traders with a few thousand dollars in action.

Currencies are exchanged as pairs, and the movement of currency pairs weigh the price of one currency versus another. For example, the EURUSD currency pair estimates the value of the Euro against the US dollar. When the value of the pair rises, this means the value of the Euro has increased against the US dollar. When the value of the pair decreases, this means the value of the US dollar has increased or the value of the Euro has fallen.

By trading Forex and CFDs, traders can make a profit off of these currency movements.

What Are the Benefits of Forex Trading?

There are many reasons why people decide to start day trading. Some of these reasons might include the potential to make extra money from the comfort of their home. The chance to discover a new skill on their own. Even the dream of attaining financial independence. And having more authority over their financial future. When it comes to forex, several advantages make this financial instrument a very tempting one to trade.

If you're based in India and would like to read more about forex trading, and how to pick a broker that would suit your needs, why not check out our Best Forex Brokers in India 2020.