Forex trading and binary options are two modern world terms that have taken the financial world by storm. This article will assist you in getting essential information regarding what Forex is all about. The process of Forex trading can be explained as the procedure in which different currencies trade their respective currencies with each other in the international market. Forex is also popularly known by the name of Foreign Exchange in the international platform, wherein the traders deal. Let us have a look at a real life example of Forex market where a trader purchases Euro and at the same time he is selling US dollars to do so. This transaction of sale and purchase is known as going long on the EUR/USD.
Forex Trading: Some Useful Information
The person or the party who assists the trader in carrying out the transactions in the Forex market is called a market maker or a broker because as a trader all you have to do is select a currency that you want to trade for your own currency as the value of the currencies change with time. If as a trader you purchased 1000 Euro for 1300 US dollars and by the end the value increased to 1300 US dollars then you gain a profit of 100 Dollars by selling the same. A Forex trader acts as a link or a middleman between your transactions of sale and purchase as, he is the person who passes on your order of purchase to the third party who fills in buyer’s position and pays the amount on his behalf in the Internet Market. Whenever you decide to close the transaction or a trade, the broker closes the transaction with the profit or loss transferred to your account instantly.
Opening a new Forex account is pretty similar to opening a bank account when it comes to formalities, the only difference being the first one is much simpler. The form which the trader has to complete is more of a margin agreement that works in favor of the Broker. The completion of the form is attributed with the presentation of required documents like an ID proof. After starting an online account, all you have to do is fund it and start trading instantly.
A broker will offer you with several types of accounts to start with but the choice entirely depends on your need and type of trading. One of the most popular accounts among the new traders is the Mini Account that offers trading with minimum amount 250 dollars whereas a standard account demands a minimum deposit ranging from 1000 to 2500 dollars. The amount of leverage available with the account also varies with the type of account you trade with as an account with high leverage offers a trader with much more amount to trade with. However, as a beginner a trader should start his trading on paper to get used to Forex terms. Now many Brokers offer demo accounts to the trader that is valid up to 30 days and allows a trader to get used to Forex trading.