(ThyBlackMan.com) Currency trading in simple terms means trading currencies. The currency trading market is the largest financial market in the world with the daily volume of transactions being over $2 trillion. This is much more than the approximate $50 billion worth of transactions taking place on the New York Stock Exchange trading is, in other words, referred to as forex or FX, which is the abbreviation for currency.
Every country in the world has a coin and these coins have their own value in relation to each other. These values are not fixed or permanent, but continue to fluctuate for several reasons. The first of these reasons is the presence of the real market. We live in an open market scenario where countries engage in trading with other countries.
In this regard, corporate firms and commercial establishments doing business overseas must send and receive payments to and from other countries. The demand and supply of these currencies lead to changes in their value. The other reason for fluctuating the value of money is speculation. In recent years, it has become the main reason for the fluctuation in the value of money, as more traders are entering the arena of currency trading, with a view to making a profit from the change in the value of the currency. For you to trade successfully, you need BYFX GLOBAL group fintech company to help you.
Currency trading, until a few years ago was limited to large financial conglomerates and banks. These were considered the engines of the forex market. However, with the recent advancement in technology and the inclusion of new types of financial instruments for trading, the forex market is also available to retailers. Individual investors can also benefit from the huge returns available in the forex market and also with lower risk and no additional knowledge about the market.
Until a few years ago, the best option to invest was the stock market. However, with stock markets around the world suffering a defeat for different reasons, people migrated to other financial instruments, with the forex being one of them. Currency trading offers several benefits over traditional stock trading. Some of these benefits are:
* The low spreads available in currency trading is a good reason for a trader to enter the market because the costs for it are low.
* There are very good chances of getting high profits because there is high volatility in the foreign exchange market. Therefore, a trader can generate high returns with a small price change.
* Leverage: Probably, the most attractive factor, leverage is the ease of using different financial instruments, such as margin accounts, to increase the probable returns of an investment. The stock leverage ratio can be as high as 100:1, while for the forex market, a 400:1 leverage ratio is common.
* The smallest choice is beneficial: considering the listed stocks, an investor has to choose from a large number of stocks. In comparison, when trading forex with major currencies, the choice is limited to only five to six. Therefore, with less choice, a trader is able to keep his focus and prepare his trading plans. He can focus on a particular currency pair and consequently conduct research and make his breakthroughs.
* Winning in both directions: there are no restrictions on short selling in the forex market. This means that an investor can win both ways. It can go short or long. This means there is potential for profit anyway, although a trader should remember that the risk factor is also present.
* There are no intermediaries: the stock trading must be carried out through a broker. However, there are no such intermediaries in forex trading. As there is no central location or market for currency trading, all transactions are routed through the financial institutions that sell currency. This is beneficial to the investor because there are no additional costs and the deals are finalized directly. In addition, there are no commissions from these brokers, as their charges are included in the purchase and sale prices.
* Not being influenced easily: the forex market is huge and this makes it almost impossible to be influenced by external or internal forces, Fluctuations in the value of the currency occur due to economic factors or factors that are beyond the control of the movers of the market. Therefore, banks, government and even hedge fund managers are not able to control or manipulate the functioning of the foreign exchange market. It is the size of the foreign exchange market, which isolates it from being influenced.
* Uninterrupted trading: stock markets are driven by the opening and closing bells of their respective stock markets. However, this is not the case with forex trading, as this market is accessible 24 hours a day. Investors can make their transactions at any time during the day, as there is a time difference between the various markets, such as European, Asian and American markets. An investor can thus schedule their trading time and negotiate conveniently.
With so many benefits in favor of forex trading, it is not a surprise that traders are completing their stock portfolios with forex trading. However, it is the perception of an individual to diversify his investment portfolio. BYFX GLOBAL fintech company is the safest company for you to invest and be successful. Some traders have completely renounced trading in shares in favor of currency trading, while there are some investors who have partial holdings in both.
Staff Writer; Greg Parker