How is Forex Trading done. Forex itself is short for Foreign Exchange and also known as the currency market. The term means the act of exchanging foreign countries currency with another country’s currency. One of the simple example of forex trade is buying an Australian dollar and then exchange it with US dollar Currency. This is one of the simplest example of a forex trade. But why does people want to do it over and over again with this simple act? Can we earn and make money with just this simple act of trade? The answer is yes.
There are already many people who have made large sum of money just by this simple act of forex trade. Isn’t it to be too easy to earn money this way? NOPE. You will need to keep in mind that involved in the forex trade is just like “Gambling”. The forex trade is the basically the business of predicting the best possible future outcome and there is no definite future that a human can predict with one hundred percent of accuracy. This short article will cover on basically how the forex trading is done actually.
Brokerage in how is forex trading done
For individuals who wants to participate or take part in the retail foreign exchange trading, the individual has to do it through the mediation of a broker or banks which understand on how is Forex Trading Done. The retail individual brokers have to obey the rules and regulations established by their own government. For example at the United States, those individual brokers or the brokers companies have to obey by the rules and regulations stated by the National Futures Association (NFA) and the Commodity Futures Trading Commission. Broker would provide services by speculation of currency trading. It can be said that the broker is an agent for the customer to broaden the Forex Trade Market.
The Workflow on how is forex trading done
The forex trade act is usually done by a broker on behalf of the customer. In conclusion, the process of the foreign exchange trade would usually be done like below for a Retail foreign exchange trading:
- The individual or investor who would like participate in the forex trade would contact the broker and invest a sum of money for the forex trade.
- The broker would then accept the money and start informing the customer about the actual and the most updated best market price on the market. The information would be the risks and obviously the profit which could possibly gained by the investor.
- The individual or investor then would have to decide whether or not to participate in the dealing by informing the broker.
- If the individual decide to participate then the broker would deal on behalf of the individual. In this step, the individual would also need to decide the sum of money that the individual willing to place on the dealing.
- After the short period of time, if the value currency has gone up compared to the buying prices, then the individual would gain profit, but if the value of the currency is smaller or go down compared to the buying prices. Then the investor would gain loss from the deal.
Hopefully this brief article would be able to give you a bit preview on how is forex trading done.