Did you know that the Forex market is the largest and most liquid financial market in the world? It’s no wonder that so many people are interested in learning more about Forex trading. In this blog post, we will discuss some interesting facts about Forex trading that you may not have known. Thanks to fbsfx pk for giving these amazing facts! So if you’re curious to learn more, keep reading!
“On the spot”
Spot trading is the exchange of currency that takes place immediately, or “on the spot.” This type of trading is typically used by businesses and individuals who need to convert one currency into another to conduct transactions in a foreign country. When engaging in spot trading, the buyer and seller agree on an exchange rate for the transaction, and then the transaction is executed immediately. The most common type of spot trade is the spot market transaction, which is a deal between two parties to buy or sell a specified amount of currency at the current market price. Another type of spot trade is the forward contract, which is an agreement to buy or sell a specified amount of currency at a future date, at a price that is agreed upon today. Forward contracts are often used by businesses to hedge against currency fluctuations.
Exclusive market in the past
In the past, forex trading was only possible for banks and financial institutions that had large sums of money to invest. The minimum amount required was typically $40 to $60 million in liquid funds. This created an exclusive market that was difficult for average investors to break into. However, this has changed in recent years. Technology has made it possible for people to trade forex with a much smaller amount of capital. Today, numerous online brokerages allow people to trade forex with as little as a few hundred dollars. This has opened up the market to a whole new group of investors and has made forex trading more accessible than ever before.
What about “Pip”?
In the foreign exchange market, “pips” refer to the smallest increments of trade. A “pip” is equal to 1/100th of 1% and is the fourth decimal place in most currency pairs. For example, if the EUR/USD moves from 1.17224 to 1.17225, that 0.00001 USD moves higher is ONE PIP. Pip values can vary by price and pair, so it’s important to calculate the exact pip value for the currency you’re trading with each time you enter a position. To do this, divide your trade size by the current ask price of the currency pair. This will give you how many units of currency are in one pip. Then, multiply this number by 0.0001 (one-tenth of a percent) to find the pip value for a standard lot. To get the pip value for a mini lot, multiply your number by 0.001 (one percent). And to get the pip value for a micro lot, multiply your number by 0.00001 (one-hundredth of a percent). All together now: Trade Size / Current Ask Price = Number of Units of Currency in a Pip X 0.0001 (or 0.001 or 0.00001) = Pip Value For Any Lot Size.
UK is the center of forex trading
Most people think that the US is the center of forex trading, since maximum transactions involve the US dollar. That is not true. In reality, 41% of all forex transactions occur in the UK, with only 19% taking place in the US. So, the London Stock Exchange is the trading hub for forex deals. The UK’s share of global currency trading has risen sharply over the past decade, from 16 percent in 2001 to 37 percent in April 2010, according to data from market research firm Tabb Group. The US’s share has fallen over that period from 36 percent to 17 percent. A number of factors have contributed to London’s dominance as a forex trading center. First, the city is home to a large number of international banks and brokerage firms. Second, English is the lingua franca of the forex market, which makes it easier for traders from all over the world to communicate with each other. Finally, London is located in a time zone that is convenient for traders in both Europe and North America. As a result, London is likely to remain the world’s leading forex trading center for the foreseeable future.
