A lot of people in spte of their experience in trading ask the question of what is forex. Gone are the days when forex trading was only meant for the big financial institutions. To sum up in the easiest words, forex market is simply a platform where the trading entity is the currencies. In order to ensure that the economies all around the world work effectively, currency exchange is needed. It is the only reason for the existence of the forex markets on global levels. With the increasing number of traders on various platforms the forex trading in India is gradually becoming the largest and the most preferred trading platforms. Like every country has its own stock exchanges where shares and commodities are being traded, the forex charts are monitored on international level and there is no particular exchange or regulatory board in the countries as such.
There is an exchange that is centralized and the traders from every part of the world use the internet to trade in currencies. Since there are various financial sectors in various parts of the world like London, Tokyo, Zurich, etc. rates can be monitored at any point of time throughout the day irrespective of the time zones. There are three ways through which trading in the forex is done, namely spot, forwards and future. Just like intraday is the most popular trading platform in the equity market, spot trading is the most popular and largest market in the forex. Not just the big brands and the financial institutions, but the spot trading option has opened the doors of forex for individual and small level market traders as well.
Since spot market is the most popular option and most of the traders start trading from this option, it is important to understand what it means. Spot market is the place where the currency trading is done depending upon that spot price. Generally this price depends upon the supply and the demand which are consequently managed by the factors like a country’s economical conditions, the base rates, political conditions and the hopes created in the market and the country. Along with these factors, circumstances in one country also hold the capacity to monitor the currency rates of other countries. Depending upon all this, a deal is being made and then called as a spot deal.
As mentioned above there are two other options of online forex trading as well which are known as forward and future. If you are planning to try your hands here, knowing the basic meaning of these is equally important. In these cases, the original currencies are not traded but there are specific norms here which are followed to make a trade. These options are generally not meant for small traders and therefore only big groups or institutions try their hands in these sectors.
So once you understand these basic things and open a forex trading account, also try to research on the workability of the forex to get a better insight and thus get results which are in your favor and yield high profits. Since this is a little complex process, give it some time and then you will automatically start understanding things in a better way.
