Forex trading is having many career opportunities as it is easily accessible by traders from all around the world. Currency trading is also used to denote forex trading. It is about being your own boss and making money with proper knowledge about worldwide currencies.
What Is the Forex Market?
Trading in currency pairs using the rates determined by the foreign exchange market is known as currency trading or forex trading. Traders buy and sell currencies at the determined currency exchange rate. When a trader sees any profitable opportunities,
forex transactions are executed. Sometimes currency exchange is also mandatory.
What Is a Pair in Forex?
Forex trading requires currency pairs for trading. A pair indicates how many units of quote currency can be bought and sold against one unit of the base currency. A base currency is a currency that is listed first in a pair and a quote currency is listed second in a pair.
Traders cannot trade using only one currency, two currencies are important for trading in the foreign exchange market. The currency pairs are also classified into three different categories that are:
Minor Pairs
Minor pairs are also known as cross currency pairs and these pairs involve currencies of strong economies. They are less liquid pairs of the foreign exchange market.
Major Pairs
The currency pairs in this category include the US dollar against other currencies of strong economies across the world. These are highly liquid pairs of the foreign exchange market.
Exotic Pairs
These currency pairs are made of currencies of emerging economies. Their liquidity is very low in the foreign exchange market.
What Are the Advantages of Currency Trading?
The foreign exchange market is the largest financial market in the world. Many opportunities are available for forex trades from which they can earn potential profits. Forex traders are having multiple advantages of currency trading that are as follows:
24 Hours Availability
The forex market means the involvement of currencies from all over the world. It also means that the reach of the foreign exchange market is worldwide. The foreign exchange market is available 24 hours a day and 5 days a week. It is the only market that can be traded 24 hours a day.
Higher Liquidity
When we talk about the comparison of the forex market with other financial markets. The number of participants is highest in the foreign exchange market. This ensures that the currency trading is highly liquid in nature. Large orders of buying and selling can be executed in the foreign exchange market easily.
