FOREX market is an active industry after the stock market as it allows the traders to earn huge amounts of revenue. The foreign exchange is known as FOREX or FX which is used for exchanging one currency for another. FOREX is the process of exchanging one currency for the other at a pre-determined price on the Over-the-counter (OTC) market. It is considered to be the most popular market where traders see an average turnover of about US$ four trillion on daily basis. The market is available online so that the FOREX trading platform can be utilized twenty-four hours on daily basis. The online market has given a boost to the revenue earning capability of various traders as well as everyday people as it has allowed them to earn huge amounts of profits based on their efforts.
Most of the currencies are quoted in terms of pairs so that the traders can easily make sense and make sure that the right decision is made. Usually, the value of the first currency of the pair is traded against the second currency’s value of the pair. The first currency is called the base currency and the other is called the terms currency. It is important to make sure that the strong currencies are used so that the right decisions are made. When trading through the trader account, the traders speculate on whether the foremost currency in the pair will either rise or fall against the other currency in the pair. For instance, when EUR/USD is used, Euro will either depreciate or appreciate and then selling or buying is done.
The volatility in the FOREX market opens numerous range of opportunities for speculation and profits can be earned even from small movements in the price. Since there are many risks involved in the trading in FOREX market, it is vital for the traders to mitigate the risk to a great extent.