Spread Betting on Foreign Exchange Markets

The Foreign exchange (FOREX) market is a never-ending cash market where the currencies of various nations are traded, generally through the brokers. Foreign currencies are continuously and at the same time purchased and sold at the local markets and global markets. FOREX market conditions are likely to change any time in reply to the changing events.

The daily Forex trading volumes measures to approximately exceed 1 trillion USD. Spread betting on Forex permits the required access to all the big names in the market currencies such as Euro, Japanese Yen and the Australian Dollar.

Spread bets are quite high-risk products for which a deposit needs to be for a small percentage of the bet value. It is not suitable for all types of customers. Before initiating spread betting, one should thoroughly ensure he completely understand the risks involved and can seek independent financial recommendations, if necessary.

The use of electronic trading networks has made it much easier and convenient to work on a large scale with the trading on the Forex market. The Forex provides 24-hours a day trading, five days per week.

Buying and Selling Currencies
It is necessary to note that currencies are at all times priced in pairs. All the trading that is done in Forex terms result in the concurrent purchase of one nation’s currency and the sale of another one. An open trade refers to a trade condition in which a trader has purchased or sold a particular currency pair and has still not arrange for the buy-back or sale of an equivalent amount to close it.

Base and Counter Currencies and Quotes

Forex currency trading community must have the prerequisite knowledge about the way the currencies are quoted. The base currency is the first currency in the pair and the second currency is the quote or counter currency. The USD (United States Dollar) is usually the base currency and the relevant quotes are expressed in units of USD1 per counter currency such as USD/JPY or USD/INR. There are a few exceptions such as Euro, the Australian dollar and pound sterling which are quoted as dollars per foreign currency.

Forex quotes at all times include a bid and an ask price. The bid refers to the price at which the market community is ready to purchase the base currency in place of the counter currency. The ask price means the price at which the market community is ready to start selling the base currency in place of the counter currency. The differentiation between the bid and the ask prices is termed as the spread.

Leveraged financing

This is related to the use of credit and is a common tool in the Forex market. Under this, the market account leverage is collateralized by the initial deposit of the investors. One can be able to control US $100,000 for as little an amount as US $1000.

Conclusion
The Forex requires needs a comparatively different style of thinking than the way that is often taken up by the equity markets. The FOREX currency market are made irresistible due to multitude of large profits opportunities because of strong market trends and quite high levels of available leverage and extreme liquidity for the advanced trading community.