Simply put, Forex trade is the exchange of national currencies between two entities at an agreed, fixed rate. The entities can be individuals, companies or central banks, and the rate is always dynamic-it keeps fluctuating all the time.
The practical purpose of Forex, or foreign trade, is to buy and sell products across the world, but that is only the only purpose it serves. There is a huge potential of profit-making in currency conversion: the pace at which a particular currency fluctuates, depends upon the trade made in that currency, in the market can make it extremely volatile. And, this volatility is bliss for traders. They can earn a huge amount of profit, or can risk losing even greater. But, it is not always a blind bet. Experience, which comes with skillful practice, in trading of currency comes in very handy.
Forex Trading seamlessly happens 24 hours a day, and the credit for it goes to a global network of banks that are spread across the world. Four prime forex trading centers situated in London, Tokyo, Sydney and New York have the lion share in all such trading practices.
Banks and international corporations do forex trading all the time, but there is no barring for individuals too. Forex trading is a lucrative business, and the recent advancements in InfoTech have made it possible for the individuals to make some good profit out of it.
For individuals, it only takes signing up an account on a major forex trading site, finding a reliable broker, and then investing some money into the business. The last part isn't easy, as you have to make very educated guesses; otherwise, your money would simply go down the drain.
The impact of politico-economic global events on forex trading:
The recent boom in informational technology has made the world increasingly interconnected, so a single event in one corner of it has a rippling effect that carries to the far off corners of the world. Although the Forex Trading is essentially an economic practice, yet it cannot be treated in isolation with political events happening across the world.
Political turmoil has a devastating effect on the economy of a country, and increases the volatility of its Forex Market. But this type of volatility is undesirable, as it shakes the confidence of the investors and brings the economy to a halt.
The transfer of government, through election or without, is the major political event in a country. It has the most profound effect on its economy. Therefore, investors have to keep an eye on all the significant political developments prior to the election. A change in government, and especially a forced one, can even change the ideology of a country. The decisions taken in expediency make currency highly unstable, and equally unappealing for investors.
Other forms of political instabilities include executives on high government positions dogged by scandals of corruption; practicing misuse of power, and unnecessarily hampering important economic activity.
War, both physical and trade, is harmful to Forex trade, and so do natural disasters.
Why Forex Trading Apps have huge edge over personal assistant?
Forex generates an estimated $5 trillion daily, and is many-fold larger than the stock market. It is next to impossible to keep track of all the currency exchanges happening across the world, and even harder to follow all the events that affect them. With the virtue of technology, forex trading apps made it possible to keep an eye on huge trade operations, and only it can be our savior.
There were times when only a personal assistant helped you making important trade decisions, and the practice is being followed till date. But they won't be for long. The rise of algorithms has made many human jobs redundant, and when it comes to data processing, silicon chips are much faster than human brains.
The forex trading apps can separate the wheat from the chaff. They can gather details of significant events happening across the world, while simultaneously processing them to get you the best insights of the market. You can open a trading account directly on them, get the best price-quotes across all financial markets, and execute your financial decision in milliseconds.
Most of these applications have an inbuilt economic calendar, news section, and market reviews and even an entire trading history. There are equipped with dummy trading widget which allows for hand-on practice of trading and have resources that can teach you at your comfort level. Also, they provide useful strategies and tactics to make decision-making easier for you.
All in all, the future of forex trading depends upon evolution in InfoTech, and automation is where the latter is leading us to.