Introduction to the
What is the Forex Market?
The currency market, also known as the Forex, FX or Spot FX market is one of the largest financial markets in the world.
According to figures from the Bank for International Settlements, by April 2019 there were around the US$ 6.6 trillion in daily operations in the Forex market.
In one of the largest share markets in the world, the New York share Exchange shares worth a total of the US$ 23 trillion were traded during all of 2019, which represents only about the US$ 95 billion per day.
What assets are traded in Forex?
As its name says, FOREX or Foreign Exchange refers to the exchange of currencies, that is, to the purchase and sale of them.
These currencies are traded through an intermediary, also known as a broker, and are usually traded in pairs such as the Eurodollar (EUR/USD) or the dollar-yen (USD/JPY).
How does the Forex Market works?
Buying or selling currencies in the FOREX market does not mean that you are physically buying these currencies.
Deciding to buy or sell currencies is more a decision based on how you consider the economic condition of a country compared to others.
The FOREX market has no physical or central location, unlike the New York share Exchange, for example. It is considered an OTC (over the counter) market since the entire market works through an electronic network connected between banks that works without interruption.
Thanks to the internet and the technological development of recent years, now retail traders can participate in the market without any problem.
At what times are currencies traded?
The forex market is open 24 hours a day, 5 days a week. Negotiations take place both day and night and also on weekends (depending on where you are in the world).
It is a market that allows you to operate it at night, at dawn, in the morning or whenever you want.
The forex market offers multiple benefits, some of the reasons why people trade in it are:
There are no compensation or exchange fees or government fees. The intermediaries are, for the most part, compensated through what is called the bid-ask spread or spread.
Low transaction costs
In the retail market, the bid-ask spread is usually quite low when operating in the most traded currency pairs.
24 hours' market
You do not have to wait for the sound of the bell that marks the start of the session, you can trade from Sunday to Friday.
The foreign exchange market allows you to trade with leverage, that is, you can place trades for amounts greater than your initial capital. Leverage has a multiplier effect on your base capital.
Being such a large market, it has the advantage of being one of the most liquid markets. This means that under normal conditions, your buy and sell orders will be executed quickly.
Brokers like DUO allow their clients to open demo accounts with play money so you can practice your trading without the risk of losing real money.
What do I need
All you need is:
Good internet connection
Computer, laptop or mobile device
Start trading without problems