The world of currency trading is a huge industry with many moving parts. People in countries all over the world are engaged in forex trading. It’s a billion dollar a year industry but it is deemed very high risk, so it comes with many challenges and considerations.
First, let’s discuss what exactly forex trading is. The foreign exchange market, also called FX or forex, is a global trading industry whose main focus is exchanging various national currencies against another. Forex trading is usually done in pairs. In other words, you are selling one currency while simultaneously buying another. For example, euros for GBP or vice versa.
Due to the global reach of trade, commerce and finance, forex markets are naturally the largest and most liquid asset markets around the world. Global forex can be cash markets as well as derivatives markets offering futures, options and currency exchanges. Traders in this industry use forex for many different reasons, but mainly to hedge against international currency and interest rate risk, to speculate on geopolitical events, and to diversify portfolios. Forex trading can be an easy industry to enter and exit for beginners and experts alike. A currency’s position can change in a fraction of a second. This is a 24 hour a day, 5 day a week industry. Trading starts each day in Australia and ending in New York. The major centers for forex trading are Sydney, Hong Kong, Singapore, Tokyo, Frankfurt, Paris, London and New York.
While anyone can get involved in forex trading, it does have many challenges. Many banks and brokers in the forex markets allow a high amount of leverage to traders, which means that traders can control large forex positions with little money of their own. Traditionally leveraged in the range of 100:1 is a high ratio but not uncommon in forex. A forex trader should understand the use of leverage and the risks that leverage introduces in an account. Unusually large amounts of leverage have caused many dealers to become insolvent unexpectedly. It should also be noted that trading currencies productively requires an understanding of global economic fundamentals and indicators. A currency trader needs to have a comprehensive understanding of the economies of the various countries and how they connect to others to fully understand the fundamentals that drive currency values.
For forex traders with limited funds, day trading in small amounts is easier in the forex market than other markets. For those with longer-term trading goals and larger funds to work with, fundamental based trading can be very profitable. All forex traders should understand the global economic fundamentals that drive forex values. Also, a good base experience with technical analysis will help new forex traders to become more profitable.
Performance Card Service works with banks all over the globe that happily support forex trading websites. We have banks that will consider working with both licensed and unlicensed forex merchants due to their ability to grant licenses or walk companies through the process. We have been successful in placing both EU and offshore forex companies as well. Please contact us today to discuss the various options we can offer your forex trading company today.