Investing money is a difficult task for many people, especially when it is done via the internet through a trading platform.
That is why today we decided to take a look over one of the most important financial markets available: the Forex Market. In order to do so, we gathered information on specialized websites such as investingoal.com and other similar sources.
Forex Market: What Is It?
The Forex market, commonly known as “Forex” or “FX”, is the largest and most liquid market in the world.
It operates exclusively online through the OTC (“Over The Counter”) market and it’s open 5 and half days a week, 24 hours a day. Because of its peculiar features, experts estimated that more than 5 trillion dollars of trades happen on a daily basis in it.
To gain from these operations, traders speculate on the fluctuations in price which characterize national currencies through an extensive use of financial derivatives called CFDs.
CFD stands for “Contracts for differences” and indicates a type of derivatives which enables two parties, usually the “buyer” and the “seller”, to enter into an agreement to trade financial instruments (such as currency pairs in this case).
Those contracts are based on the price difference between the entry and closing prices. In specific, this means that if the closing trade price results higher than the opening price, the seller will have to pay the difference to the buyer. On the other hand, if current asset price results lower once at the exit price compared to the contract’s opening value, then it will be the seller to benefit from the difference.
Forex Market: How To start?
First, if you want to get access to a trading platform and start trading in this financial market, you’ll have to have access (it goes without saying) to an internet connection, and then find a broker.
A Forex brokerage service will give you the possibility of opening a trading account, which is a door to the whole FX market. Still, there are many of those services available on the net, and not all of them are secure. To be sure to deal with a legit broker, you must be sure of dealing with a regulated broker.
Regulated brokers are defined by the licenses possessed and the regulations imposed on them. As of today, there are dozens of agencies around the world which watch for any irregular activity in their jurisdiction. Between the most famous ones we remember:
- CySEC for EU
- ASIC for Australia
- FCA for the UK
- FDF for Switzerland
- SFC for Hong Kong
- DFSA for Dubai (Special Economic Zone)
It is extremely important to divide regulated brokers from non-regulated ones, so that you’ll be able to make a first and essential selection between the many brokers present online.
Finally, when choosing a good broker for FX you should aim to those brokers which include in their offer the possibility of using a demo account. This kind of account is extremely useful for beginner traders (but not only them) and gives you access to a trading platform so that you can see with your own eyes what it has to offer.