A global marketing system that can be decentralized or can be an over the counter market system to help in trading between various currencies is known as forex trading. Forex trading comprises of all aspects such as buying, selling as well as exchange of different currencies at the current prices or that has been determined. Forex trading ensures that one can with different currencies as it is easy to exchange them and this will ensure smooth running of the international investments and trading processes. Forex trading is done all over the world and it is usually done all the time having the largest trading volume. Fluctuations in the prices of different currencies happens all the time and there are various factors that influence the exchange rates for these currencies such as economic factors, political conditions as well as market psychology. Some economic factors include the spending and budgetary processes of a country, inflation, balance of the levels and trends in trade, productivity of the economy of a given country and also the economic growth and its sustainability. The anticipations from getting a new government in a country as well as cases of political instability are some of the political factors that lead to fluctuation in exchange rates for a given currency.
Forex brokers enable people to engage in online forex trading. A forex broker is a firm that provide online platforms for currency traders so that they can buy and sell currencies. The foreign exchange market volume for forex brokers is not that big but it allows traders to have access to the markets all the time. When trading, the trader will open an online account with the forex broker where they will be selling and buying shares at a small transaction fee. When opening a currency trading account, one is required to deposit a given amount of money which acts as a collateral between the trader and the forex broker. It is also possible for a currency trader to use borrowed capital to buy and sell currencies so as to increase their financial asset and the capital can be more than the collateral.
When choosing a suitable forex broker to open an account, it is important to consider certain factors. There are issues that can arise during forex trading such as abusive practices, fraud and manipulation hence the forex broker need to be fully licensed by the regulating body to ensure protection. Other than making withdrawals and deposits easy for the traders, the forex broker should also give clear guidelines on the account they have for traders such as margin and leverage, spreads and commissions and initial deposits. A suitable forex brokers should have a clear indication of the pairs of currencies that are offered. The trading platform in the forex broker should be easy to use and should also ensure that the customer service is available at all time.