What is meant by forex trading and its advantages?

Author: Priya Agrawal

In forex the asset class which is being referred is currency. Foreign exchange means changing currency of one country to currency of other country for different reasons.In forex market banks, government, traders participates for exchange of currencies. Currency tips are also used by traders to manage risk and returns in an optimum manner.This market is also called as currency market and is largest as well as most liquid market of the world.Traders can trade in forex anytime of the day as it is opened for 24 hours a day and 5 days a week.

Currency trading is the act of speculating the price of one currency against some other.Let us take an example to understand this: A trader believe that euro is going to rise against the value of USD, then he may buy EUR USD currency pair low and then sell it at a higher price to gain profit from it.If value of USD rises against euro then obviously he will be at a losing position.This market is capable of offering high returns but it is equally risky as well.So while trading in currencies it is very much important to carefully analyze the risk factor.

Some of the most recognized benefits of forex trading are discussed below:

  1. There is no market opening and closing time in forex.Trade anywhere you want and anytime.Every market has its opening time, closing time and traders have to trade within it.This market offers traders with more flexibility to trade anytime 5 days a week.
  2. It is the largest market in the world and its daily volume is $3 trillion per day (approximately). Existence of more number of traders makes forex market highly liquid and also makes it easy to get in and out of positions.
  3. There is no list of thousands stocks present here. Only few currency pair exists on which traders needs to focus.Making choice of stocks is quite difficult as several stocks are listed over the exchange and analyzing them is a tedious job.
  4. Markets highly volatile nature offers traders with an opportunity to make profit in any market condition.There is no structural bias as well,traders can make profit in both rising and falling markets.

These are few advantages of trading in currency pairs which have attracted for number of traders towards it. Along with forex, commodity market is also quite popular among traders.Commodities like gold,silver are traded on large volume over mcx as they are of highly liquid nature and protect against inflation.Commodity market experts suggested mcx tips are helpful in earning profitable returns while trading in precious and base metals. Both forex and commodity market trading has offers several benefit but involves some amount of risk also.It is recommended to set your goals which you want to accomplish from market and learn about market in which you trade before beginning to trade.