Introduction
Forex stands for foreign exchange market and is the largest world market. It is similar to the stock market but here the currencies of different countries are dealt with by the brokers. Forex comes into play when trading of commodities is done between the two different countries. When the trading is been done then the currency of one country is dealt by the Forex in for the other country. The involvement of the international market made Forex to have an upper edge over the stock market. Adding to the scenario there are different factors that effects the trading through Forex. Detailed discussions about Forex are done in the coming portion.
Characteristics
There are number of characteristics of trading through foreign exchange market. The most important one is that it is a 24 hour trading platform which runs 5 days a week. All these days these can be accessed by the traders all over the globe. Liquidity is another characteristic of Forex. In Forex money is randomly being transferred from one place to another making it the highest liquid market. It is the most volatile trading market available in the world. Investors can earn a high amount and also loose at the same time due to the volatility of the market. There are standard measures for the measurement and control of the downfall of the market. There are various characteristics of this market that allows Forex to make profit at both the time of huge profit or loss of the market. Last one in the queue is the availability of various options for spending no money on commission. There are many ways in available in the Forex market that allows the trader to trade without giving commissions to the middlemen. Currency pair is the idea behind the Forex to trade always with the two set of currencies. For example the sets of currencies are EUR and USD and the trader buys around 1000EUR but for that he has to pay around 1028. As the EUR/USD i.e. the Forex rate is 1.028. In the similar way the person can sell his shares when the Forex rate goes up to make a profit out of it.
Effecting factors
Among the factors that make the Forex to change the value of the share all the time economic factors plays an important part. Economic conditions of government of a country have a big role in the value of its currencies in the global market. If the purchasing and selling power of the country is more then it will have a higher Forex rate. Political condition of the country also has a role to play in the Forex market. The most important factor affecting Forex to decide its market is psychology of the present market. This can be divided on the basis of quality, economic numbers, technicality factors and duration of trend.
Conclusion
Thus it is clear that Forex is the bigger version of the stock market. It functionality is dependent on various factors. It is normally used for the transaction of large amount than that of the stock exchange. Also it has got more investors that that of the stock market due to its almost profitable returns.
