Currency Trading Platforms
Forex, or Foreign Exchange, as it is more commonly known is the simultaneous exchange of one country’s currency for that of another. Differing from other financial markets, forex markets have no central location or exchange. Forex markets are based on currency trading platforms. A currency trading platform is basically like a stock exchange, the only difference being that instead of shares or stocks, the transactions executed are the different currencies of the major countries of the world.
Speculation underlines the forex markets. With the intention of profiting when the value of currencies purchased or sold undergo a change in the interest of the buyer, the investor purchases of sells one currency for another. The change in rates takes place due to market upheavals or any major event that takes place in the world.
The purchase or sale is also done with an objective of shielding the buyer from the adverse effects of downfall in the exchange rate of any currency, which may have a negative effect on his investment profits.
Currency-trading platforms are available on the same criteria to the individual investor and to corporates. Currencies are quoted in pairs. The first listed currency is known as the base currency, while the second is called the counter or quote currency. In the wholesale market, currencies are quoted using five significant numbers, with the last placeholder called a point or a pip. Like all financial products, forex quotes include a “bid” and “ask”. For example, USD/Euro may bid at 131.40 and ask at 131.45, this five-pip spread defines the trader’s cost, which can be recovered with a favorable currency move in the market.
Normally the trades entered in to are for a fixed quantum for each currency.
A currency-trading platform is a resource for an investor to either invest in currencies for gaining profits or to shield himself from the downfall of a negative movement of the exchange rate in the value of a currency wherein lies his personal interest of liabilities or assets.