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HOW DO YOU TRADE FOREX?

Investment banks and commercial banks mostly do forex trading—and bankers, on behalf of their clients; however, anyone can trade one currency against another based on speculative opportunities. A speculative chance is one that an individual feels will become a big winner in the Forex market.

Individuals, companies, and institutions trade the Forex market in 3 ways: The spot market: The spot market is the largest forex market and has the underlying real ‘asset’ which the forward and future market tradings are based on. Simply put, the spot market is where you, I, corporations, and institutions buy and sell currencies. The price of currencies in the spot market is determined by supply and demand. A currency’s price is usually a reflection of many factors like interest rate, political stability, economic performance, and more. If many people want a foreign currency, then the demand is high, and the price will become high; however, if people want to dump a particular currency, supply becomes high, and the price of that currency drops.

Spot deals are bilateral; that is, you trade one currency for another. When the sale closes, investors get paid in cash—the deal may take two days to settle.

Therefore:

–        Forex is mainly traded in the spot market.

–        Trading is bilateral: you exchange one currency for another, and settlement is in cash.

–        You can hire an investment banker or bank, a commercial banker or bank to invest in Forex for you, or do it yourself. 

–        People who invest themselves do so from speculative opportunities.

–        When trading from speculations, do not invest all you have because you can win big or lose big with Forex.

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