Understanding Forex in 4 Points

Article written in collaboration with Avatrade

Also called FX, Forex is a currency market where convertible currencies are traded at rates that vary permanently. This currency market is the largest and best known in the world. Forex has many strengths that make it particularly adored by trading fanatics. What are the advantages of Forex? You will get to know them after reading this article.

Accessibility and flexibility

You can, with low capital, start trading Forex, as Forex brokers offer you the possibility to trade with a bet of 33 euros per EUR / USD pair. This bet corresponds to a position of 1000 euros on which the trader will only bet, thanks to the leverage effect, 3.33% of the funds.

Forex is open 5 days a week and 24 hours a day. The European trading sessions are open from 8:00 to 18:00 and the Ocean, Asian and North American sessions take place for continuous trading. The flexibility of this currency market is one of the things you will particularly like when you start learning how Forex works.

Leverage and liquidity

European traders have the option to use high leverage of up to 1:30 on major currency pairs such as EUR / USD. This means that the trader can only bet 3.33% of the amount of each position.

Currency markets have a reputation for being very liquid. They allow for fairly high transaction volumes without a significant impact on pricing. These vary based on the time of day and the currency pair.

Affordable transaction costs

Brokers who are in the currency markets, unlike what is happening in other currency markets, are remunerated by the spread. Note that the spread is the small difference that can be seen between the ask price and the bid price of a currency. Therefore, there is no minimum fee of 10 euros typical of share purchases.

Universality and volatility

There are a large number of free Forex educational resources. You won’t find any market that, after being discussed, is analyzed and discussed so much on YouTube and equity forums.

Forex is proving to be an extremely speculative market and there are currencies that move a lot, offering many opportunities for FX traders. Daily currency trading has quite a high volume in Forex. This is estimated every minute in billions of dollars traded. This makes the cost changes of some currencies very volatile.

A regulated market

Forex appears to be an interbank market that is significantly influenced by the interventions of institutional actors such as commercial banks and central banks. However, the risks of manipulation are reduced by the fact that there are ultra-strict regulators that keep an eye on things.

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