Unlike the past where most of the forex market players are large financial institutions, now retail traders contribute significantly to forex market volume. But making out a career from forex trading is not that easy. A beginner forex trader should be aware about some of the basic forex trading stuff.
- The uniqueness of FX market: Forex is the largest, most liquid, most wide, continuously traded, uncontrolled and unregulated financial market of this planet. There are no short-trading restrictions, insider trading rules or position size limits.
- Commission Free and Bid-Ask Spread: In forex market, there are dealers not brokers. The bid-ask price difference is the cost of trading against the dealer.
- Pip: Pip or percentage of point is the smallest change in currency pair exchange rate. Generally it is the change in fourth decimal point of the value.
- No physical exchange: All retail forex trades are mere computer entries. There are nothing sold and nothing bought. The profit or loss of every trade is entered in respective accounts. Actually unlike stock market every FX trades include buying one currency by selling other. That is both long and short trades in one transaction.
- The major currencies: The major currencies and popular pairs made out of them accounts for more than 95% of forex market transactions. These currencies include USD, EUR, GBP, JYP, CHF, AUD, CAD and NZD.