Forex is the most popular markets among traders. It is used by individuals, businesses, and travellers who need to exchange currencies to use in different countries. The market remains open for 24 hours a day for five days which makes it a market that never sleeps. Forex is also a massive market compared to any other financial market. Since it is easily accessible for people, you too can learn and invest in forex to benefit from it like any other trader. But before you start exploring, here are some things about forex that you should know.
Forex goes back
Forex has been around since the ancient times where people used to exchange currencies. They even took a commission for doing so on behalf of others. The first currency exchange is traced back to the Talmudic writings.
The GBP/USD currency pair is known as the Cable among traders in the forex market. It is called as such because before the internet, satellites, and fibre optics, the stock exchange between London and New York used to take place through a giant steel cable that ran under the Atlantic.
Bulls & Bears
The traders are categorized into bulls and bears. The bulls are those who stay optimistic about the market and believe it will go up. The bears believe that the market will fall. The names where given based on how the bull and bear strike. The bull always strikes upwards, and the bear strikes downward.
Forex currently has the biggest liquidity with traders exchanging more than $5 trillion a day, which is way more than the stock market makes. US dollar is currently the most traded currency in the world which gets featured in around 80% of the trades.
Forex is used by traders for spot trading. The reason why it is called spot trading is that it allows traders to exchange currencies on the spot. This makes the traders make quick profits, although they might not be the best profits.
Forex was once only possible with the help of banks and institutions which has at least $40 million to $60 million. Only businesses were able to make the forex trades. Today when forex has moved to the internet, it is completely decentralized, individuals can make trades for as less as $25.
There is not a centre
Forex is a completely online-based platform and has no land-based centre. There are, however, forex hubs around the world where the trades are managed. These centres include Sydney, Tokyo, London, New York, and more. 41% for the entire forex transaction occurs in the UK, and only 19% happens in the US. London is the biggest trading hub for forex in the world.
Pip is a term used commonly in forex trading which refers to one-tenth of a pip or the fifth decimal currency value. For an example of the value of the euro is 1.17225, then the pip value for the currency is 5.