What is the Forex Market?

Forex means (foreign exchange) market in which trade is done on currency pairs. Forex includes purchasing and selling of currencies in the market. Forex manages (OTC) over-the-counter market.  In this market, trades are performed directly among parties, typically with trading platforms and over-the-call trading systems. Forex market is the largest market and its per day trade is 6 trillion. When someone is doing the trading in forex market then they know that it gives higher leverage compare to other markets.

What is Leverage in forex?

Leverage means traders have the ability to control positions in the market with a small amount of capital. It permits traders to increase their ability to trade at a bigger level. Means if the person have 1$ then the broker will allow you to trade with the leverage of 1000$.

Currency pairs:

In forex, there are 3 types of currency pairs mainly and they are:

1. Major currency pairs: This currency pair includes the US dollar (USD), which is paired with the euro (EUR), Canadian dollar (CAD), Swiss frank (CHF), or Australian dollar (UD). It has high liquidity and high trade as compared to other currency pairs.

2. Minor currency pairs: This pair does not include the US dollar. It includes EUR/GBP, GBP/JPY, and AUD/CAD. Minor pairs have lower liquidity and less trade as compare to other currency pairs.

3. Exotic currency pairs: This includes one major currency and one currency from a minor market economy. It has lower liquidity and larger spreads than minor pairs. It includes USD/TRY (US dollar/ Turkish liar).

PIP in forex

PIP usually stands for the one-digit movement of the fourth number after the decimal. PIP is used to measure the difference between Ask price and bid price and to calculate profit and losses in the forex market. Traders used PIPs to verify entry and exit points.

Advantages to trade in forex market

• Forex market is 24 hours open and works 5 days a week. Forex market does not work on weekends.

Forex has different risk levels and it requires less capital.

Many traders prefer forex for quick returns.

The Forex market gives higher leverage than other markets.

Forex is better for technical analysis and in these spreads are small.