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A Quick Introduction to Forex and Forex Brokers

A Quick Introduction to Forex and Forex Brokers


By Advertorial

Thursday 4 March 2021, 09:18AM


Foreign exchange reading has always been popular, and with the advent of automated trading bots, it has become a much more widely accepted activity. This article will give you an overview of what forex trading is, how it happens, and the state of Liteforex in Thailand.

What Is Forex?

Forex is a combination of the words Foreign Exchange. It is the process of changing or converting one currency into another for the purposes of trade, finance, or tourism. For the purposes of this article, we will take Forex to refer to the process of trading.

What Happens in a Forex Market?

A foreign exchange market is simply where currencies are traded against each other. It is a very important and interesting process, and the world as we know it would come to a standstill. Why? Suppose you live in Thailand and want to buy a Japanese manga, an Indian spice, or a French wine. You need to pay for the goods in either Yen, Rupees, or Euros for any of those transactions.

If you have that particular currency, well and good. However, the chances of you having the currency you want to buy things in is very low. In this situation, you will have to exchange your currency for a foreign one. Either you will do it yourself, or the importer will have to do it for you. 

Either way, every time you buy something from another country, you are taking part in a Forex trade.

The interesting thing about Forex markets is that there is no centralized place you go to for foreign exchange. Instead, most of the trades happen online through over-the-counter electronic transactions. These transactions are handled around the clock for five and a half days of the week and across several centers of financial importance, such as New York, London, Paris, Zurich, Frankfurt, Hong Kong, Singapore, Tokyo, and Sydney.

Why so many many? This is to make sure that a market is open in most time zones across the day. If you want to trade for Australian dollars or Yen, you need to trade during the hours when that center is open. Similarly, when that center closes, the American one opens up for business. You, as the trader, need to work during the hours when the traders of the currency you want are active.

Risks Related to Forex Trading

Like everything else happening on the internet and related to money, there are many risks involved with Forex trading. Because it is so decentralized, there are no standard rates. The market is very volatile, and rates can change as many as twenty times in an hour. In fact, depending on which part of the world you are trading from, you may find that the market is completely free of regulation of any kind.

There are many guides for beginners that detail the various risks involved and how to get around them, and if you are among those people who are just getting your feet wet in the field, looking up ways to protect yourself is probably the best thing you can do. 

Pros and Cons of Trading Forex

Forex trading is not easy. There are many things that make it profitable, and there are also many other things that can become problematic. In this section, we will present some of the most significant pros and cons related to Forex trading.

 

Pros

Cons

  • The Forex market is the largest when it comes to the number of people partaking in daily trades, as well as the number of trades actually taking place. This makes it very liquid and allows for easy entry and exit for people making trades and exchanges.
  • Forex traders use a high ratio of leverage, which allows them to borrow money from brokers in order to make trades. These ratios can be very high, meaning the amount of profits that are made can reach the skies. However, high leverage also means that traders can lose all their money in the case of a bad investment. Understanding the risks inherent in the system are important for this very reason.
  • Trading is available 24 hours a day over five days of the week. It starts in Sydney and ends in New York, giving people across several far-flung time zones a huge window of opportunity to conduct their trades and make money.
  • To trade in Forex, you as a trader need to have a strong understanding of how the market works and predict how changes in one currency will have a far-reaching, cascading impact on the rest of them. Trading is a study of interconnectedness within the market, and you need to always have your finger on the pulse and change your operations on a dime. This requires a heavy investment of time.

Forex Trading in Thailand

In South Asia, Thailand is among the top emerging markets. The Forex markets are very well regulated by the Bank of Thailand and the Thailand Securities and Exchange Commission. They have put a structure in place that is both robust and accessible, and this makes for a breeding ground of activity.

Due to the structures and regulations in progress, only registered dealers are allowed to trade in Forex. Due to this, you can be sure that only reliable brokers are handling trades. What is more, since there is a growing trend in the country to trade in Forex, there is a lot of support available for beginners who are just starting out in the industry.

Conclusion

Forex trading is a rewarding process, but it is also a risky business. There is a certain level of thrill associated with trading. At the same time, navigating the volatility and risks surrounding you is undeniable. However, in the face of these challenges, make sure you are equipped with the proper knowledge and resources to adapt, improvise and overcome any situation that you face.

Never forget that it is the internet, so always an exit strategy no matter what you do. Otherwise, trade safely, and good luck!

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