Introducing Forex Trading
money trading has a long history and can be traced back to the ancient Middle East and Middle Ages when foreign exchange started to take shape after the international merchant bankers devised bills of exchange, which were transferable third-party payments that allowed flexibility and growth in foreign exchange dealings.
Nowadays, forex market or FX market is popular for investors. Due to great popularity, the FX market is the biggest and fastest developing market on earth. Everyday, transaction’s turnover exceeds 2.8 trillion dollars. The turnover rates in FX are estimated 30 times higher than total quantity of equity trades in United States. Although FX market involves an extremely high turnovers, but the market nevertheless not open to public before year 1998. Since year 1998, inter-bank units are segmented into smaller lots where more people able to invest in this market. Now, the partakers in this market are central and commercial edges, corporation, institutional investors, hedge funds, and private individuals like you. The big involvements by all parties cause the FX market’s turnover already greater.
Generally, market is a platform where goods are traded, and the same goes with FX. In FX market, the ‘goods’ are the currencies of various countries. For example, you might buy Japanese Yen for Canadian Dollars, or you might sell Dollars for Euro. It’s as basic as one money for another.
In FX market, large international edges take part in contributing largest portion in daily FX market transaction. Each day, these large extent international edges contribute more than 70% trades in money market. Among all the meaningful players, Deutsche Bank is one of the top money traders. Besides, other international edges like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch also some of the meaningful edges in controlling money trading.
Commonly, when you plan to deal with money dealers for money trading, you may easily notice the following facts – two-sided quote. What is two-sided quote? truly, this quote comprise of ‘bid’ and ‘ask’ price, which the prices are listed clearly on dealers’ panel. The ‘bid’ price is the price you will receive when you sell off the base money, while the ‘ask’ price is the price you need to pay when you intend to buy the base money. Let me show an easy example, EUR/USD 1.2385/1.2390. The value 1.2385 represents the ‘bid’ price, while the value 1.2390 represents the ‘ask’ price.
From the example just now, you can clearly notice that two-sided quote will make you loss when you buy and sell at the same time. You are required to shell out higher price than the selling one. The higher premium that you paid is truly the commission fee as money dealers usually will not request any commission fees from you as in usual.