Top Rated Forex Brokers

Forex is the largest trading market in the world. People all over the globe are trading currency and when you trade currency you are trading dollar amounts or amounts equivalent in that part of the world’s currency. So when you are trading money you are merely invested in money value. Thus the value of the market of Forex is higher than the stock market as the stock market is paper assets as is the bond market.

Forex market is also the most liquid of all markets as its currency its just a matter of exchanging money. Simple exchange vs the stock market where you may be trying to sell at a bid that doesn’t hit or even a market order that just can’t go through because that stock has low liquidity.

The Liquidity

As talked about previously, Forex is a very liquid market that trades 24 hours a day. That liquidity is determined by the time of the day, however, there is always liquidity at every hours, just better at certain times of the day. If you are trading pound for instance, and its 4 am British time, the liquidity is going to be lower than at lets say 1pm British time because more people are trading the GBP. However, there is always people around the world trading currencies at all hours. Any of the major currency pairs have so much liquidity its not even a factor to worry about.

Forex Leverage

When you trade Forex you are using some form of leverage. The degree of leverage is up to the trader and what that trader is willing to risk. It also comes down to the forex broker and what they are offering their clients in terms of leverage. The broker is offering the trader a loan so that the trader can “hopefully” make a greater return on their trade. The loan is paid with interest. This “trading loan” is known as margin.

Forex traders make money by trading 1 or more currencies and playing for pips. A pip is known as a point in percentage, but in reality it is just 1 point and each point matters when trading. Each forex pair pays out a different amount per PIP.