There are a lot of people who have a lot of questions about forex rates and the forex market. If you have a lot of questions about the market it would be best to have them answered before you start trading. You should actually have these questions answered before you start looking into trading. The answers to many of the most common questions will help you determine if forex rates trading is right for you.
How is Forex Rates Trading Different?
The first question that most people will have is what makes forex trading different to any other trading. The market that forex is most commonly compared to is the stock market. This is due to the stock market being one of the most commonly known and the other market that allows a lot of retail trading. The first major difference between these two markets is the trading times. The stock market will have certain trading times depending on the exchange you are looking at. The forex market is open 24 hours a day during the week and has no central exchanges. This means that you are able to trade any currency you want at any time.
How do Brokers make Money?
When you look at other financial markets you will see that the brokers charge a commission. When you look at forex brokers you will see that they do not charge a commission. This leads many people to wonder how the brokers are going to make their money. Instead of a commission the broker will charge a spread. The spread is the difference between the two prices that you are quoted on the market. There are two common schemes that are used to create the spreads.
The first scheme is the fixed spreads and the second is the variable spreads. When you look at the fixed spreads you are going to be getting the same spread at all times. With the variable spread the amount will change depending on the market conditions. The variable spread is the more commonly used of the two methods.
What are You Buying and Selling?
There are a lot of people who do not actually understand what you are going to be buying and selling on the market. With the stock market you are going to be buying and selling the stocks of the company. With the forex market you will be buying and selling currencies. All trades on the forex market are done using currency pairs. This means that when you trade you are going to be buying one currency on the pair and selling the other.
The currency that you are buying and the one that you are selling will change depending on a number of factors. The base and counter positions of the currency is the first factor that you have to consider. You also need to consider if you are going long or short with the trade. When you combine these two factors you will be able to determine what you are buying and what you are selling on the market.
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