What is Forex Trading and How to Trade FX?

What is Forex Trading?

Capital VarsityForex trading is a financial transaction between buyers and sellers, who transfer currency amongst each other at an agreeable price. It is a transaction in which individuals, companies, and central banks convert one currency into another. If you have traveled abroad, you must have made a forex transaction. The majority of currency conversion is undertaken to earn huge profits. Currency converted every day can make price movements of some currencies dynamic. It is this volatility that makes the forex market extremely attractive to traders.  Forex market activities can be segregated into 2 categories namely, Spot transactions and Forward transactions.

How to Trade Forex?

In India, as per extant RBI guidelines, spot transactions are not conducted on exchanges, and it takes place between two parties; over-the-counter (OTC) market. One cannot normally trade in this market and the same is only for actual users. However, one can trade in forward market segment which is also undertaken on exchanges in the form of currency derivatives, currency futures and options. You can trade in forex in different ways, but they all work the same way by simultaneously buying one currency while selling another.
Any trader can participate directly in this foreign exchange trading which is easily available online. You can earn good returns by using derivatives like CFD trading. CFD enables you to open a position for just a fraction of the full value of the trade. CFD not only analyses your profits but also informs you if the market is moving towards loss.
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