Introduction To Forex Market

Forex market is one of the biggest financial markets in the world. This market operates 24 hours a day. It is the most liquid market with the daily turnover of about 1.5 trillion dollar. The foreign exchange market has no central clearing house or exchange and is considered an over-the-counter market. By trading in the forex market you can earn a big amount of money in a short period of time. However, this market is normally traded on margin. A relatively small deposit can control much larger positions in the market. The following article shares a brief introduction to forex market. So, read on to know more about this market.

Basically, in the forex market different currencies are traded, but there is no physical exchange of the currencies. The currencies are always quoted in pairs. The first currency is called as the base currency whereas the second currency is known as the quote currency. Forex trading takes place directly between the two counterparts necessary to make a transaction, whether over the telephone or on electronic brokerage networks all over the world. This is a trade that includes simultaneous buying of one currency and selling of another one. There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies, and governments that buy or sell products and services in a foreign country must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation. Read on to get more information about forex market.

In the forex market the currency combination used in the trade is known as a cross. One of the great benefits of this market is that, it provides the facility to trade 24 hours a day. The forex market is also known as the spot market because trades are settled immediately, or "on the spot". The fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis. Know more about forex market.

In the forex market different currencies pay different interest rates. This is one of the primary reasons behind foreign exchange trends. Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate. Moreover, it is essential for you to have proper knowledge about forex market before you start trading.