Forex, or FOReign EXchange, is the world’s largest financial market with an average daily turnover of over $5 trillion. You may have thought that trading was only for the financial elite, but if you have ever travelled abroad, the chances are that you have already participated in the market. In its most basic terms, Forex is the purchase of one currency in exchange for another.
Let’s say that you are booked to fly from London to Paris, you may purchase Euros to spend on your trip and you will buy them using your Pounds.
(Image of a FX board at airport with Buy Sell columns)
1 GBP = 1.14639 EUR
Using the Exchange Rate above, you are going to Buy €500 for £436.16.
This is an example of a simple Forex transaction, but millions of traders all over the world are capitalising on market fluctuations to buy and sell currencies to make a return from each deal they make. And they don’t even need to fly to different countries!
How online Forex trading works
Whether at home, at work or on the go, traders can utilise a choice of platforms to buy and sell financial instruments with ease. Many traders will take advantage of charts and charting tools to spot opportunities within the market as well as keeping up with global news.
When traders have researched a currency pair and believe that there is an opportunity in the market, they can open and close trades with just a couple of clicks within the TigerWit app.
There are many tools available to traders that can help open and close deals without having to constantly monitor them. These include stop loss and take profit features and orders. By utilising these tools, traders can take advantage of the market without interrupting their schedule.
What is an underlying currency?
What are some of the most popular FX pairs?
What affects the value of a currency?