Forex trading in very simple words, means the buying of one currency and selling of another one. This process is carried out simultaneously. The currencies in this market are always traded in pairs such as US Dollar/Japanese Yen, great Britain Pound/US Dollar etc. Maximum percentage of the Forex trading is basically done with the help of the major currencies like Australian Dollar, Swiss Franc, and Japanese Yen etc. The Forex market operates all 24 hours and 5 days a week and because of this reason, the global dealers can trade very comfortably at their convenient time.
The Forex market is actually the largest financial market in the entire world and the total volume of the currencies which are traded daily in this market, exceeds the value of $1.9 trillion and this is indeed a big amount undoubtedly. This amount of $1.9 trillion is basically larger than the total and combined value of all the equities and the future markets put together of the United States. In the beginning when Forex trading was a new concept, it was executed only between the government central banks and the commercial banks as such. But now as the market has gained popularity over the years and as a result of this popularity now Forex trading has become accessible to the private investors also. But for this to happen, the growth in the technology and the internet has an extremely important role to play.
The two types of prices which play an important role in Forex Trading are the bid price and ask price. The difference between these two prices is termed as the spread. The bid is actually the price at which the buyers are willing to buy, while on the other hand the ask is the price which is related to sellers and this is the price at which the sellers are comfortable and willing to sell at any time in fact.
The actual time when the transaction of the currencies takes place is when one currency occupies the top position, while the other currency goes down. If the trader has the right knowledge about the Forex market, then he can take advantage of this situation by choosing the right currency and ensuring maximum profit for himself. Before starting to invest in the Forex market, one should have an in-depth knowledge of this financial market, to gain maximum profits.
Guest post by Philip.