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What is electronic currency trading

 Currency trading is the process of buying and selling currencies with the intention of making profits in the foreign currency market or what is known as forex, as this market represents a source of foreign currencies and exchange, and it is the largest and most liquid financial market in the world; As the average daily turnover exceeds 5.1 trillion US dollars, according to the latest reports of the Bank for International Settlements, which is a global bank for national central banks.


How to trade currencies:

Where currency trading is based on the principle of selling one currency in order to buy another currency, and therefore this process is always referred to in currency pairs, for example the British pound / US dollar (GBP / USD) pair includes buying the British pound sterling and selling the US dollar. That the symbol used for each coin consists of three letters, the first two letters of which abbreviate the name of the country and the last letter of it represents the name of the currency, and the first currency listed in the currency pair appearing on the left side of it when written in English is called the name of the base currency, while the other currency shown on the side is called Right-hand as the quote currency.


Types of trading in the Forex market:

The Forex market is managed by a global network of banks spread across four major trading centers distributed in cities of different timezones, namely: London, New York, Sydney and Tokyo, where there is no headquarters for the Forex market, currency traders can trade foreign currencies directly electronically Between the two parties 24 hours a day, bearing in mind that there are three ways of trading foreign currencies in the Forex market, namely:

 Spot Forex Market:

As it is considered the largest and most preferred market for trading among Forex market traders, as currencies are exchanged in it according to their current prices, and the settlement process usually takes two days.


 Forex Futures Market:

 Where a contract is concluded to buy or sell a specific amount of currency at an agreed price, and it is settled on a specific future date or within a range of future dates, noting that futures contracts are legally binding contracts for both parties.


Forex Future Market:

Where a contract is agreed to buy or sell a specified amount of a specific currency at a specific price and date in the future, and it should be noted that future contracts are not legally binding, unlike futures contracts.





Advantages of the Forex Market:

As many beginners in currency trading and professional investors alike prefer trading in the Forex market; Because of its advantages that facilitate currency trade, among the most important of which are:

  • It is considered the largest financial market in the world, as it can be easily accessed from all parts of the world.

  •  The possibility of using the market by everyone, so that both large and small investors, individuals and companies can trade through it, as it does not necessarily need a huge initial capital.

  •  The magnitude of the market and its permanent liquidity, and the huge size of the Forex market may contribute to an increase in liquidity in it, which facilitates foreign exchange trading operations all the time without financial obstacles.

  • A decentralized financial market, whereby no party, regardless of its importance, can control exchange rates; Due to the size of the market and the huge number of participants, trading is usually done directly, i.e. without a broker.

  • Profit in the upward and downward directions, as the participant can find trading opportunities and profit, whether the price of the currency pair is high or low.

  •  Trading at any time, as it is available five days a week, 24 hours a day, as trading operations start with the opening of the Sydney session and end with the New York session and then start again, and thus trading operations last around the clock.


Forex Market Risks:

As foreign exchange trading in the Forex market is not without risks, and investing in it may not be the best fit for everyone, as it is always recommended for the success of currency trading to define investment goals, acquire some skills and experience, and the willingness to take risks and be able to bear it; In order to avoid exposure to heavy material losses, it should be noted that the most prominent of these risks revolves around the difficulty of determining foreign exchange rates, as exchange rates are affected by global political and economic factors that are difficult to analyze and draw reliable conclusions in trading operations. Therefore, most of the foreign exchange trading operations are based on speculative indicators, and therefore this is the main reason for the high rate of volatility in the global Forex market.

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