Once upon a time in Antwerp, Belgium, there was a place where people gathered to trade the so-called “curretiers de change”. They also traded debts at that time, and that’s why we can call them the first brokers.
Since then, times changed and we reached what are commonly known as Major Stock Markets, physical places situated around the world that are depicted in many Hollywood movies such as “Wall Street” or “The Wolf of Wall Street”.
Both movies are shot, it goes without saying, in the New York Stock Exchange, commonly known as Wall Street because of the homonymous street where it is located.
But not everybody knows that, as of today, there are financial markets which do not have a physical location like the one of the past or the actual one. Those markets are called OTC (“Over the Counter”) Markets and they are present exclusively online.
And that’s the “place” where Foreign Exchange Market is “located”.
If you are interested in this kind of market, you can check this interesting forex website.
Forex market and CFDs
Forex Exchange Market, commonly known as Forex or FX, is a decentralized OTC market that trades in foreign currencies.
These trades are obtained by trading a pair of currencies simultaneously and it is, right now, the largest market in the world in terms of trading volume.
It has many peculiar characteristics that makes it unique, such as:
- a huge trading volume with an high liquidity
- a significant geographical dispersion
- the possibility of operating 24 hours a day
- low margins of relative profit
- the possibility of using a leverage to power-up profits and los margins
But its main way of trading consists in the use of a derivative financial product called CFD (Contract For Difference).
CFDs are financial instruments which are used not only on the FX market, but on basically every online trading platform. That is because thanks to It a trader has the chance of gaining profits not only by doing a direct investment in a financial asset, but by investing money on it in the long term or the short term, without actually buying it thanks to the CFDs.
With all that being said, CFD trading, and therefore FX trading is extremely volatile.
Risks related to this kind of trading are quite high, and they can jeopardize all of your investments in a blink of an eye if you don’t invest.
How To Invest In Forex Market
If you are interested in investing in the FX market, the easiest way to invest in this vibrant market is to open an account with an online broker.
Firstly, you will have to choose an online broker well-regulated in possession of all licenses needed to open operations in your territory, such as the CySEC license needed in Europe. If you don’t follow this golden rule, you will find yourself in a bad position where you can lose all your money in a scam or have legal problems. with local authorities.
Another key factor to be aware is related to account diversification.
For example, If you are a newbie of the foreign exchange market, or you just want to take confidence with the new trading platform, a good idea would be to open a demo account with the selected online broker.
Thanks to a demo account, you will receive a fake virtual balance to start operating in the market and see the effects of your actions without being worried of losing actual money.
Speaking of money, to conclude our article we want you to pay attention to other fees which is essential while doing FX trading.
We are speaking about the spread.
Before opening an actual account with a broker, do some research about the best spread fees among online brokers, but do not rely exclusively on them: some brokers show only a specific spread as “the best spread”, but it doesn’t mean that it will always be the same spread for every operation.