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With the world fast becoming a global village, more and more people are traveling and doing business in different parts of the world. In such circumstances, it is important that you have the local currency of the country you are visiting to aid your travel. Traditionally, travelers have been buying and selling currencies through banks to aid their travel and business. These banks set special rates and sell currencies to people in need. However, in the late 1970s, this trend changed and traders began adapting to what is now called the foreign exchange market.
The foreign exchange market is also called the currency or foreign exchange market. In simple words, it is the place where the trading of currencies takes place. It is the largest market in the world with a daily turnover of $1.3 trillion. What began as an inter-bank exchange has now grown to the point where there is a floating exchange rate that determines the demand and supply of a particular currency. Today, anyone with an understanding of how the financial markets work can participate in forex trading.
The forex market is entirely dependent on supply and demand which makes it a highly volatile market. Furthermore, despite the fact that only a few major currencies are traded in the forex market, the trading volume is enormous. This is because every country is a part of this market and has financial institutions and individual traders who trade in foreign exchange thus creating a large amount of currency for trading.
Today, you can trade forex over the internet from anywhere in the world. All you need to do is open your online forex account with the broker of your choice, deposit funds and start trading. The forex market is open 24×7 making it possible for traders from all over the world. However, expert traders know that there are certain hours of the day when the market is at its peak. During these hours, there is a lot of volatility and certainly a lot of movement. These are known as power hours and they usually coincide with the end of the European trading session and the start of the US session. Moreover, the forex market has its own cold zone where there is not much movement. This usually happens when both the US and European sessions are closed while the Asian session is open.
The amount of profit you can make in the Forex market can be immense if you use leverage appropriately. However, you must be careful not to overdo the leverage without adequate training as this can quickly become your downfall.
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