Currency Trading

In this article, We learn about "Currency Trading".Let's Go!

Currency Trading, Forex Trading or Forex Trading refers to the buying and selling of currencies on the Forex market in order to make a profit.

It is one of the most actively traded markets in the world, with an average daily trading volume of over $5 trillion by individuals, businesses and banks.

Unlike stocks or commodities, currency trading does not take place on an exchange, but directly between two parties in the over-the-counter (OTC) market.

The foreign exchange market is operated by a global network of banks located in four major foreign exchange trading centers in different time zones: London, New York, Sydney and Tokyo.

Currency trading works like any other exchange, you use currency to purchase an asset.

When it comes to Forex, the market price tells traders how much of one currency is needed to buy another currency.

For example, the EUR/USD currency rate shows how many dollars can buy one euro.

There are two popular ways of trading the currency market. Use Derivatives or via Forex Brokers.

The most popular forex derivatives are Spread Betting and CFDs .

Transaction methodProduct Description Forex Derivatives ProviderSpread BettingForex spread betting allows you to speculate on the future price direction of a currency pair. Your profit or loss depends on how much the market moved in your favor before you closed your position and how much money you invested at each swing point. Forex Derivatives ProviderCFDForex CFD is an agreement to exchange the difference in price of a foreign exchange currency pair from the time you open the position until you close it. If the market price moves in the direction you choose, you will make a profit, and if the market price moves in the direction you choose, you will lose money.Forex BrokerCurrencyForex brokers are companies that buy and sell currencies on behalf of retail traders, usually through a forex trading platform. Like stockbrokers, they charge a fee (though usually in the form of a spread rather than a commission) to execute orders placed by their clients. A key difference, however, is that a forex broker will trade over-the-counter rather than on an exchange.

Traditionally, many currency trades were conducted through Forex brokers, but with the rise of online trading, you can take advantage of currency price movements using derivatives such as spread betting or CFD trading.

If you want to learn more foreign exchange trading knowledge, please click: Trading Education.

EUR/USD USD Euro