Forex
With a daily average trading volume of U.S. $1.9 trillion dollars, Foreign Exchange market, also referred to as the “Forex” or currency market is the largest financial market in the world
Why trade Forex?
- 24 hours market
The spot FX market is unique to any other market in the world, as trading is available 24-hours a day
- 2 Ways Transaction
2 Ways transaction give possibility to make money when the market goes up or down. Most people are used to the idea of making money when they buy a commodity - it goes up, then sell it and have made a profit. In forex it is possible to sell a currency at the market price and then buy it at a cheaper price, a profit when the market falls.
- Simplicity
The simplicity of following only a small number of currencies, instead of watching hundreds of portfolio, makes forex trading more relaxing.
- Leverage
With $100,000 contract size, forex trading allows people to control a large amount of currency with a smaller deposit, usually 1%. Profit potential is almost unlimited. As traders increase their trading balance, traders can increase in the number of units taken and making more money can be done without any extra work.
- You cannot go lower than your account balance
In the forex market, if a trade goes against your position and you were trading without a stop (something that is not recommended) you only face loosing your trading balance. Your position will most likely be closed out by a margin call, thus protecting your other assets (home etc...)
How it works?
Example:
Investor A sell 1 lot EUR / USD at 1.3450 and liquid his position with buy at 1.3400.
Profit/Loss = (1.3450 - 1.3400) x 100.000 x 1
= USD 500 (plus commision)