Forex Trading

Forex trading amounts to the largest amount of financial transactions in the world. The forex market has become the cynosure of world traders. The ease of trading and the leverage offered make forex trading truly viable and lucrative. However, one should learn the various aspects of the forex market before investing. Incomplete knowledge about forex trading can cause huge losses.  
Margin Forex Trading  

Forex is generally traded on margins. This means that a trader can open an account at a small price and trade through it. Due to the high leverage offered, it is possible for even low deposits to yield huge profits. Most of the brokers offer margin accounts and let traders operate at as low as 1%. This means that for a trade worth $100,000, the trader only needs to deposit $1,000. Leverage works both ways, which means that it multiplies both profits and losses.

Forex Trading Quotes 

Forex trading is done through quotes that indicate the rate of exchange of one currency in terms of another. For example, in the quote of USD/JPY- 94.9036/94.9040, the figures mean that by selling USD (base currency) a person will get 94.9036 JPY whereas buying a USD will cost 94.9036 JPY. The buying price is usually high and the difference between the two prices is measured in pips. In the aforementioned example, there was a 4 pip difference. 

Forex Trading: Spread and Commissions 

Most of the forex brokers operate without any commission. They make money through the spread differences. Spread is the quote specific to a currency pair. Even a single pip movement can amplify into big profits through leverage.

Forex Trading: Spot or Forward

Forex trading is done in two ways:

    * Spot
    * Forward

Spot trading is done in real time on current prices. The traders ask or bid for the currency through the trading platforms and such trades are settled within 2 days. A forward trade is a settlement made in advance for a specific date and time with a specific amount of forex. 
For a successful forex trading experience, there are other factors like fundamental and technical analyses that a trader must go through incisively. Otherwise, forex trading will remain a tough investment option to master with all its vagaries and volatility.