FOREX SUMMARY

About Forex market

With a trade volume of 3.5 trillion USD per day, Forex has the most liquidity among all financial markets. Its trade volume far exceeds the total volume of futures and stock market. On the Forex market, you are always buying or selling a combination of two currencies (currency exchange), of which one currency is bought and the other is sold. This means that when an investor buys a currency, he or she expects its value to increase against its counterpart currency. For instance, the relative concept of EUR/USD, where the former is called the trade currency, or base currency, and the latter, USD is the quoted currency.

Trade on margin

Trade on margin, or leverage trading, is where the investor’s tradable capital asset is higher than the capital value of the account. Forex trade is a typical margin trade, which is usually sold or bought based on leverage, because the daily currency exchange usually fluctuates between 1%~2%.

Exchange market participants

There are several kinds of participants who pursue different goals in the Forex market. In a traditional sense, banks are the market’s main participants.

They are still the biggest traders on today’s Forex market, based on their total market share percentage. The promotion of transparency has made the Forex market more equitable today, in which everyone can now participate and have access to the same low decimal differential price as the banks.

Although the banks remain the main participant of the trade market today, newly-joined market makers, such as hedge funds and product trade consultants, have appeared in great numbers during the last 10 years. National banks also play an important role in the trade market, as well as multinational corporations who also hold high interests in the low-risk Forex transactions.
In the last 10 years, the number of individual accounts is rapidly growing, and it’s very difficult to seize an exact figure of their total count on the market. However, based on approximate statistics, individual accounts occupy up to 20% of the total market share.

The advantages of Forex trade

24 hours non-stop trading  The Forex market never closes. Trades are transacted almost 7 days a week, 24 hours a day. Many trades open on Monday, New Zealand market time, which is Sunday night in Europe, until Friday night before the United States market closes.

Liquidity The trade market operates on a very large scale, and is still growing on a daily basis. The trade volume by far is 3.2 trillion USD, and the rapid progress of our technology provides an opportunity for almost everyone to enter the market.

Leverage Effective use of fund to increase the profit potential, with extreme high flexibility.

Low Forex fractional pip Forex fractional pip represents a very small difference in the price of buying and selling. When comparing the 2-decimal difference in Euro/USD and one share, it’s simple to choose the most active stock, and the decision can be easily made. Also, for major clients, a Forex market can provide a “better” quote than the stock market. In reality, fractional pip is the hidden internal cost in Forex trade, and decimal differences in a Forex market are very small. The promotion of technology and its popularization allows almost everyone to participate in the small decimal Forex trade.

Rise and fall can both be profitable Forex is a strong market, where the exchange rate constantly fluctuates. If a trader feels that the depreciation of a certain currency might occur, then he or she can choose to sell almost without any restrictions. However, if the position is being held for more than a day, then it should be considered that holding the position will bring in cost. In short, whether buy-in or sell-out, whether the market is fluctuating up or down, the Forex market will always have space for potential profit.

Equal opportunities for market update Although Europe and the United States have introduced the best management system, very few will deny that professional traders and analysts of the stock market always have a much greater competitive advantage over personal traders. For Forex market, the only monopolized advantage for major banks is perhaps the fund liquidity data. Forex market is a very fair and equitable market, where almost every participant can have access to the ever-changing market updates.