iForexTrader

TRADING FOREX

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Currencies are traded at the foreign exchange market and are important to most people around the world. The currency trade exists in order to conduct foreign trade and business.

How is forex trading conducted?

All forex trading is conducted electronically, over-the-counter (OTC), which means that all transactions occur by means of computer networks between traders around the globe. The market is open 24 hours a day, five and a half days a week, and currencies are traded in all the major financial centers around the world.

Unlike most financial markets, the OTC forex market has no physical location or central exchange and trades 24-hours a day through a global which means that currency prices are continuously changing in value against each other thus presenting multiple trading prospects.

Unlike the stock market where all the orders are processed, Forex is a product cited by all the main banks, but not all banks have the same rates. Online forex broker platforms take all the currency feeds from the different banks and then provide quotes that are an approximate average of them. Therefore it is the broker who is effectively handling the trade and setting the market for you to trade. This fact makes it extremely important to compare forex brokers before choosing one.

What is forex trading?

Forex trading is speculation of the future rate of a specific currency pair. For example, a trader who expects the rate of the EUR/USD to go up may want to long (buy) the pair hoping the price will go up and subsequently sell at a higher price thus making a profit, but if the trader suspects the EUR/USD to fall, the trader might want to choose to short (sell) the currency pair.

A trader can open and close positions within minutes or hold a position for almost an unlimited amount of time. Currency prices are based on global supply and demand and cannot be manipulated easily because of the massive size of the market, which does not permit even the major players to manipulate the prices.

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