The word “Forex” is an abbreviation of foreign exchange, which means foreign exchange trading. The currency market is quite liquid in nature and spreads throughout the world. Finance, commerce and trade are also all-encompassing areas. With the help of Forex market, a trader can determine the exchange rate of any other currency. In addition, on this market, currencies are exchanged, sold and bought established or current prices.
According to the reports, in April 2019, the daily trading volume of the Forex market was $6.6 trillion. Such numbers are impressive and demonstrate how Forex could change people’s lives for the better. In our article, we’ll talk about Forex and the peculiarities of making money in this market.
Main advantages of Forex
The financial market has a wealth of earning potential, regardless of the order of settlements or clearing transactions. It doesn’t matter if the transaction is over-the-counter (OTC) or the currency is sold through the exchange, in any case, the trader will be able to get high profits.
Forex is an OTC or decentralizes market used to trade different assets. It has a lot of differences with the exchange market. In an OTC system, two parties are involved in a transaction, while exchange users are subject to government regulation.
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Exchanges operate on only one trading platform, while transactions are conducted through the central organization. Forex isn’t bound to one location. It has multiple moderators that provide contacts between the parties of transactions. For this reason, all Forex market participants enter into transactions with each other offline, without visiting the central controlling body. OTC transactions take place electronically, creating convenience for different investors.
There is no price adjustment for OTC products in Forex. Prices depend on market fluctuations, supply and demand. Forex isn’t bound to an exchange, so there is no fixed opening and closing times. All transactions can be performed 24 hours of the day.
Forex trading involves low trading fees compared to the stock exchange. Even people with low incomes tend to make money in Forex. How to make money on Forex? Benefits of Forex trading:
- low entry barriers that encourage people to become professional traders;
- a wide range of currency pairs, which reduces the risk of failure;
- high liquidity of Forex market which allows moving lots of money into and out of currencies through small spreads;
- Forex brokers enable traders to use leverage to carry out transactions in the foreign exchange market;
- Active trading and copying transactions can help you earn some passive income.
The table below shows the differences between a Forex and an exchange market.
Below is a table with the differences between Forex and the exchange market:
|Differences||OTC Forex||Exchange market|
|Timing||24 hours a day||Fixed|
|Convenience of transactions||High, trading is done electronically||Low, you have to visit central exchange single trading floor.|
|Regulator||Parties involved||Government bodies|