User:PearlineGuerra556
The field of forex trading differs considerably from trading of other financial instruments and commodities. Forex trading is considerably not the same as stock, bonds and futures trading. Understanding the basics of this marketplace is extremely important for a trader to learn from the market.
The Biggest Financial Market: The daily trading volume of the currency market exceeds 4 trillion $ $ $ $ by far it is the largest financial market exists within the known universe. The major players from the market are banks including central banks. They carry out most of the big transactions from the market. The retail traders contribute a small sector from the market, but the contribution is increasing swiftly through the years due to the ever increasing popularity of forex currency trading.
Twenty-four hours a day Exchanging Sessions: The world forex trading marketplace is open 24 hours a day from Sunday evening to Friday evening GMT. However the transaction volume in intraday trades show great variations because there are three major trading sessions as Asian session, European session and United states or US session. It comes with an overlapping of Asian and European sessions as well as European and US sessions where the trading volumes can be quite high. And, there's a considerable gap between US session close and also the start of Asian session in which the trading volumes can be very low. The currencies of countries in the particular region are most traded when the regional session is open.
Over-The-Counter Trading and Currency Pairs: Currencies are traded in pairs. One can buy a currency by selling another. The price relation between your two currencies may be the exchange rate or the cost of the happy couple and is priced up to your fourth decimal point. The tiniest price change easy to a pair is known as pip and it generally equals 1/100 of 1% from the exchange rate. The trades are executed over-the-counter meaning directly between your buyer and seller; and there aren't any centralized exchanges or regulatory bodies for forex currency trading.
The Three Types of Lots and their effects on the stock market: Forex trades are carried out in lots. Now there are three kinds of lots open to retail traders as standard lot, mini lot and micro lot. A standard lot is the position size that equals $100000, a mini lot equals $10000 and a micro lot equals $1000. When trading with standard lots, a pip difference in price may cause $10 profit or loss. Similarly with mini lots the same can cause $1 change and with micro lots a 10 cent ($0.10) change. Also it should be noted that the accessibility to the kinds of lots varies with broker since many brokers offer only standard and mini accounts.
Typically the most popular Currencies: However, there are hundreds of currency pairs available for trading, most volume is contributed by only 18 currency pairs comprised of eight most widely used currencies. These currencies include USD (US Dollar), EUR (Euro), GBP (British Pound), JPY (Japanese Yen), CHF (Swiss Franc), CAD (Canadian Dollar), NZD (New Zealand Dollar) and AUD (Australian Dollar). Retails traders also prefer these currencies as they are most liquid.
