What Does Forex Trade Mean ?
Forex trade or FX trade simply means trading activities carried on between different currencies. In short buying and selling of different foreign currencies which might either be for international trade or investments. The fluctuation in currency rate is owing to constant operations in this lucrative Forex market.
It is also commonly known as FX market. It has nothing to do with stocks. In case of stock markets, news or leaked information of any sort can greatly affect the price. With regard to Forex you will hardly find such issues. You can too enter into trading. All you need is the working knowledge of this market, the various categories.
The market scenario keeps changing. You can have complete access with the Forex dealers. Insiders do say that 70 percent of market depends on speculation. Let us have a look at the trading components. Initially the contract size is measured in units. Unit coincides with the corresponding currency. There has to be pairs which can either be a combination of any two foreign currencies. Let us consider (USD/EUR). Here, the very 1st currency would ideally be termed as base and the latter would be termed as quoted. So, USD happens to become the base and Euro can be called quoted. Each pair would come with a quote.
Do check the market index to understand that more clearly. While trading, these pairs should be assumed as one single unit. You will come across PIPs, which are the crucial point of Forex market. Price interest Points are actually the last digits of any pair. For instance, when (USD/EUR) =1.2529/1.2528, then 9 can be considered the PIP for USD and 8 can be considered PIP for EUR. The distinction between these two points is considered as PIP spread and that is solely responsible for earning profit.
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