With the advent of online trading, Forex has been achieving high popularity nowadays.If you are also interested in doing Forex trading, you might have some questions in mind.
Here are 10 most frequently asked questions on Forex:
- What is Forex market and who are its major players?
Forex market is where a currency is traded for another currency. For example, the USD may be traded against the GBP and vice versa. There’s a continuous monetary flow in the Forex market because traders from around the world exchange currencies.
Traditionally, banks and large financial institutions were themajor players in the Forex market. But nowadays, due to the popularity of online trading, individual investors are also investing in the Forex market. The major players these days are small scale retailers, multinational companies, private speculators, and brokerage firms.
- How is Forex market different from other markets?
It differs in terms of its operations. Forex market is not governed by any government, therefore, all the transactions in Forex depend on credit agreements between parties. Additionally, there is no panel you can refer in case of disputes because there are no clearing houses for verifying trades.
- How do I choose the right Forex trading platform?
The Forex platform that suits one’s needs and priorities is the right platform. Those platforms are mostly provided by Forex brokers, therefore, it depends entirely on the broker you choose. The trading platforms that offer round-the-clock customer care are the best.
- Is Forex trading expensive?
The trading cost depends entirely on the broker. Most brokers charge commission, while others use a more complicated approach. Therefore, it is recommended to ask your broker directly about their commission or any hidden charges, and peruse the contract in detail.
- Is trading in the Forex market safe?
No its not. Forex trading is very risky. That’s why it is recommended to spend some time and read about it, get educated and learn how to make strategies that are fit for your capital. It is also recommended to test your skills on a demo account before making a decision to trade real money.
- Which currencies are traded?
There are seven most liquid currency pairs that are used widely in the Forex market:
- How do I start trading in Forex?
If you are a beginner, then it is recommended that you start with a demo account in order to gain experience and understanding in Forex trading. With demo account, you can experiment various strategies without investing your money. There are many trading platforms available that you can use to analyze the market as well as automatically execute transactions. After gaining knowledge and experience from a demo account, you can register your trading account with a brokerage firm.
- What currency should I buy?
The currencies in Forex market are traded in pairs.For example, there are Euro-U.S dollar pairs that are displayed as EUR/USD. As a trader, you should buy a currency that you feel will become stronger in the near future.
- How can I train to be a Forex trader?
There are many online and offline resources you can use to learn about Forex trading and get as much information as possible. Forex brokers offer demo accounts which you can use to learn strategies in Forex trading. Before startingtrades using your real money, you should perfect the art of trading.
- How much do I need to start off with?
Although, the minimum trading size on Forex is usually 100,000 units of currency (it is referred as a “lot”), there are firms that allow you to buy in significantly smaller lots than this. You can easily locate such firms by researching on the internet.