Forex - The Best Place To Exchange Currency

Forex is the largest international foreign exchange market, where speculative transactions on the exchange of one currency for another for the purposes of obtaining profit are executed. The share of such transactions makes up to 95% in the turnover structure. The remaining 5% of turnover fall to the share of public institutions, companies, which buy or sell any goods abroad and exchange earnings, obtained in foreign currency, to national currency. Generally, deal-making process is performed in pairs (EUR/USD), etc.  In the process of making currency transactions there is a selection of the most “top-selling” currency, which is called “principal” (US dollar, Japanese yen, British pound, Euro, Swiss franc, Canadian and Australian dollar).

The Forex market is often compared to a giant exchange office. Actually, there are several similar features, but there are also differences. These differences and advantages make the Forex market the best place to exchange currency.

Among the most prominent Forex market benefits are the following:

A trader, operating in the Forex market, has the opportunity to earn a huge amount by investing little money. However, apart from the fact that the Forex trader earns, he pays the fee, charged for the execution of trading transactions – transactions for buying and selling currencies. The main commission in Forex is spread, i.e. the difference between the buying and selling price of currencies.

Specialists distinguish fixed and floating, standard, or for smaller accounts commissions and fees. Fixed spread – is the commission, which remains unchanged under all circumstances prevailing in the market. Floating spread – is the commission of 2 pips provided the stable situation on the market, however, it may be increased to 40 to 50 pips when the market is experiencing unforeseen changes. There are commissions that the trader pays, for example, for withdrawal of funds or opening of the transaction.

There are several ways and practical recommendations on how to avoid extra charges and fees. Commission on Forex market is usually a fractional amount, its effect is significant only in the case of the commission in case of implementing the scalping trading strategy, when within one day of trading a large number of transactions, generating minimal profits, are executed.  Typically, the commission level depends on certain factors such as the forex currency pair liquidity, volume of the operations performed, market conditions.

The trader, when choosing the broker for trading on the foreign exchange market must take into account the spread value. The trader should try to avoid brokers who promise to undertake all the costs, as the earnings of the broker consists of the spread which traders pay as fees for transactions. The trader should give the preference to the broker that provides the ability to operate in the market without additional fees, using the spread as payment for the transactions performed. Before you open a trading account with a Forex broker, you are to carry out the considered analysis of all advantages and weaknesses. Make the right choice!

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