Whether or not you are an investor, almost everyone has heard of forex trade. ‘Forex’ is the common term for ‘foreign currency exchange’, which refers to the global trade in world currencies. Totaling over US$5 trillion in value every day, the forex market dwarfs all others. With this huge volume come massive opportunities for profit.
Types of Forex Trade
The forex market is operational 24 hours a day, five and a half days every week. In ordinary forex transactions, investors invest in one currency that they believe will rise in value as compared to another currency. A variation of this is the concept of cfd forex.
In a normal forex trade, the period that the investor ‘holds’ the currency is open-ended. They can choose to sell whenever they wish.
CFD is the acronym for a Contract for Difference. CFDs may be applied to virtually any type of financial derivative or asset. In the context of forex, they refer to a prediction on the part of the investor on whether a particular currency will rise or fall against another currency by the end of a set period.
With CFD forex, the investor does not take physical possession of any asset or currency. The deal is an agreement between themselves and the other party, facilitated by a broker. It is possible to place a CFD trade in any direction – a correct prediction of a currency falling in value attracts the same value as a correct prediction of an increase in value.
Maximizing Your Profits
One of the chief advantages of forex trade is that there are no fees and charges associated with each trade. However, there are some expenses associated with forex investments:
Account – Brokers offer investors a forex trading account. These accounts may come with membership fees for the service and knowledge resources provided.
Platform – You will need an online trading platform like MT4 to place your trades and allocate your capital. Most platforms are free to use but some very advanced versions may charge fees.
Spread – This is where a broker makes their cut for facilitating the forex transaction.
Choose a reliable broker like ForexTB that charges low fees and offers a secure trading environment.