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Online Currency Trading Forex

Written by ForexCult Team
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Online Currency Trading Forex Online currency trading forex is another hot topic these days that a lot of the traders are interested to learn about. Since I know how important the online currency trading forex information is, I am going to dedicate this article to making sure that you completely understand currency trading and to make sure that any questions that you may have, are answered. This article is not going to tell you everything that you need to know about online currency trading forex but it will give you a brief introduction into the subject and it will also make you a better trader in the market. So please take the time to read this information and to study it so that you will have the knowledge you need to become a successful trader. You know even though the forex market is known as the largest market that is located within the world, it is still known as unfamiliar terrain to the retail traders. In hasn’t been until the past couple of years that the forex market has been opened up to the individual investors because in the past years, you will find that the only people that were involved were the financial institutions as well as the hedge funds and multinational corporations. The Difference of Online Currency Trading Forex Let’s start this conversation with determining the difference of this market with the other markets that are out there for you to trade in. Despite the fact that the trading of stocks as well as futures and options take place on a regulated exchange, currency trading doesn’t take place on an exchange that is regulated. It is also known that currency trading is not controlled by any governing body and there are no clearing house guarantees and there are also no arbitration panels that can adjudicate the disputes. All of the traders are strictly trading each other based solely on credit agreements. Needless to say, when it comes to business in this market which is the largest market that is out there in the world today, business is done with nothing more than what is none as a metaphorical handshake. So now that we understand the difference between the currency market and the other markets let’s talk about where the commission is located when it comes to FX. You should know that the forex market doesn’t have the commissions like the other markets. In fact, the forex market is based solely on principals. The forex firms are dealers and shouldn’t be considered brokers; this is something that every trader needs to understand. Understanding Online Currency Trading Forex Like I have said in the paragraph before this one, you should never think of a dealer as a broker. Dealers are different than brokers based on the fact that the dealers are known to assume the market risk by actually serving as what is known as a counterparty when it comes to the investors trade. The dealers, unlike brokers, do not charge commission and the only money they make is through the bid as well as the ask spread. Now let’s take a look at what pip means to you as a trader. Pip means percentage in point which is known as the smallest increment of a particular trade in the forex market. When it comes to the prices in the forex market, you will see that the prices are actually quoted in what is known as a fourth decimal point. So what are you actually selling or buying when it comes to the currency market? Nothing is the answer to that question. When it comes to the forex market it is purely known as a speculative market. There is never really a physical exchange of currency. You and Online Currency Trading Forex When it all boils down to you and the online currency trading forex, it is important that you know that you are more than able to learn all the information that you need to know in a timeframe that is acceptable to you. It is important that you work at your own pace and that you are aware of what you are learning. Don’t look at the information one time and think that you have it mastered because unless you are a genius, you don’t and you are going to need to take time to study the information. You should break down the information in sections and learn it that way. Once you have learned one part of online currency trading forex move on to another.