Trading in the Forex Market

Forex market is the world’s global financial market where banks, brokers and individual traders buy and sell currencies. Forex market has no centralized marketplace, and currencies can be traded in whatever market is open at any given time. Trading in Forex market, as a rule, takes place through a market maker or a broker. Forex traders can choose different currency pairs and use different trading strategies to get use of Forex market advantages.

Trading in the Forex Market: Overview

Foreign Exchange market is a market where currencies are traded. Here counterparties buy a certain volume of one currency and pay for it with another one at the market price – the quote. The exchange rate (quotation) of currencies depends on the correlation of demand and supply. The trade turnover of this market is constantly growing. Forex market has some features that distinguish it from other markets. Forex market has high liquidity because of significant trading volume and a large number of market participants. Another important feature of Forex market is its stability. Forex market is not falling itself. If one currency is falling in a currency pair, the other one is growing.

While trading in Forex market, it is possible to make profit from currency rate fluctuations. The stronger the fluctuation, the higher the profits or losses are. Decreasing rate in Forex market also can be beneficial, if the trader sold the currency pair. Learn more about What is Forex Market.

While trading in Forex market, one buys the base currency for the quoted one to sell it in future and make profit, when the rate is increasing. However, when the rate is decreasing one can sell the base currency for the quoted one to buy it in the future at a lower price.

Trading in the Forex Market: Advantages

Trading in the Forex market can be advantageous in some aspects:

Forex market works 24 hours there is no need to wait to react.
High liquidity enables the possibility of entering and exiting the market with any volume.
Traditionally Forex has no commission charges.
Availability to open short and long positions without any limitations.
Availability to trade in the Forex market with leverage. This allows you to take advantage even of the smallest move in the market. This also makes your trade riskier, as can increase gains as well as losses. Learn more about What is Leverage in Forex.

Trading in the Forex Market: Strategies

There are different currency trading strategies available for traders' use in Forex market. However, most of strategies can be categorized in two main groups: speculating and hedging.

Speculating involves buying or selling financial asset to take an advantage of an expected move. Usually speculators carry higher than ordinary risk. Most currency trading occurs among very liquid and active currency pairs.

Hedging is to avoid possible losses from currency price fluctuations. This is often used by companies who work with foreign countries. Traders in international financial markets also use hedging to gain as much as possible from their investments.

IFC Markets is a leading innovative financial company, offering private and corporate investors wide set of trading and analytical tools. The company provides its clients with Forex and CFD trading through its own-generated trading platform NetTradeX, which is available on PC, iOS, Android and Windows Mobile. The company also offers MetaTrader 4 platform available on PC, Mac OS, iOS and Android. You may compare the advantages of both platforms.