Frequently asked questions an online Forex.
Q.What is Forex and Forex trading?
A. Forex stands for Foreign Exchange Market (FX) which is an arena of trade of currencies between nations. The value of currencies keeps changing against those of others and Forex traders make money by sale and purchase of currencies in the Forex market.
Q. What is Leverage?
A. Leverage is borrowing a certain amount of money needed for investment in something. Forex trade offers high leverage which means that a trader can build up high amount of money for an initial margin requirement.
Q. What is Liquidity?
A. Liquidity is a quick conversion of an asset into cash without having a big effect on its price. In terms of Forex, it implies the buying or selling of a currency pair without influencing its price.
Q. What are Forex instruments?
A. Forex instruments are the products or ways of Forex trade.
Q. What is Day Trading?
A. Deals opened and closed on the same day constitute Day Trading. If the deal lasts more than a day, it is automatically renewed each night at 22.00 GMT until its closure. However, the renewal is charged.
Q. What is a Forward Deal?
A. A contract to buy or sell the currency at a spot rate for a defined day in future is called a Forward deal.
Q. What is a Limit Order?
A. Nomination of a rate for opening of a deal is known as the Limit Order.
Q. How to know which currency will go up?
A. International currency rates are extremely volatile and it is difficult to predict the growth or fall of it.
Q. Is the Foreign Exchange Market regulated?
A. Yes, Forex is regulated at many regions (though not all).
Q. Is Forex risky?
A. Yes, it involves enormous amount of risk.
Q. What is Forex scalping?
A. Trading currencies to profit from a currency in high volatility in a short period of time is called Scalping. However, it is considered as a dangerous method.
Q. What is Long/Short in Forex?
A. In terms of Forex, Long means to buy and Short means to sell. If you buy currency to later sell it when it gets a higher price, it is termed “going long” or taking a “long position”. If you want the currency to fall in value and buy it back at a lower price, it is termed “going short” or taking a “short position”.
Q. How to make money with Forex?
A. Though the risk is great, Forex investing is a potential way of incurring profit. The ability to conduct marginal trade on Forex leads to enormous profits as compared to initial capital investments.