RUBRICORE – What is the foreign exchange market? Foreign exchange is a kind of investment in which the investors trade using foreign currencies. The investment is known also as Forex, standing for Foreign Exchange. The foreign exchange indeed sounds promising for the big profits you can gain. But at the same time, it is also risky, particularly for beginners. That’s why this type of investment is also said to be controversial.
The foreign exchange or Forex is traded in a site or place, commonly known as the foreign exchange market. Well, if you are interested to be a trader, make sure to know some characteristics of the foreign exchange market as follows.
Over the Counter
Forex trading uses a transaction type, known as Over the Counter. It means that there are only 2 parties involved in the transaction, the trader and the broker. It is different from stock trading in which there are 3 parties involved, the trader, broker, and the stock exchange.
This type of transaction gives a consequence in which the currency value can be different from one broker to another. So, before joining this investment, make sure that the broker chosen is really trusted.
The Product is in the Digital Form Only
If you want to go abroad, you may exchange your current currency for the destination’s currency. For example, if you want to go to French, you may need to exchange your Dollar for Euro. So, there are real products to exchange; Dollar and Euro.
In the market of foreign exchange, you will not get real money like that. All the products to transact are only available digitally. When doing a position closing in Forex, you can just see the value difference only. Whether you get profit or loss, it is seen from the difference.
Very Liquid
In the market of foreign exchange, the traders come from many realms such as the representatives of countries, companies, corporations, investors, and more. They make the market more liquid. Sure, it is very beneficial for all the traders as transactions can be done more easily.
Open for 24 Hours
The Forex market opens for 24 hours. It is different from the stock exchange that only opens in particular hours. So, when the Asian market has been closed, the US market opens. It is continued by the European market and so on. With unlimited time like that, a chance to invest and transact in the foreign exchange market is getting bigger.