Foreign Exchange is a way of earning money from the exchange rate fluctuations. In the 70s it was first conceived and in 1990, with the introduction of Internet technologies, its popularity grew. Forex trading operates on the basic principle that when currency exchange rates increase, a trader will make money by selling their currencies. Commodity trading involves actual commodities, such as silver, gold and oil, being traded in order to earn money, extra resources!
Internet technologies not only have increased the speed of Foreign Exchange Trading, but they have also led to an increase in brokers on the market. Brokers are intermediaries between the traders and the market. They help execute the transactions that their customers have ordered. Online brokerage firms such as Alpari UK 4XP HotForex FxPro are very popular. There is a fierce rivalry between these brokerage firms to get the maximum number of traders.
Online brokers provide support 24×7 with automated trading platforms. MetaTrader 4 is the most common. MetaQuotes released the first software for trading in 2002. The software was designed for Forex traders to provide them with the latest market information, automated accounts and analysis reports. Different versions of software are used by brokers according to preferences. Search for a certified MT4 brokerage to prevent any future legal issues.
Forex transactions involve two currencies. This is because the base currency (the currency being purchased) is called that currency while the quoted currency is what is bought. This concept is simple: The price that the trader must pay to purchase the base currency (i.e. bid price) has to be lower than his selling price. The ask price.