Things to Know before Becoming a Forex Partner

Forex stands for foreign exchange- the process of changing one currency into the currency of another country. It is an important part of international tourism and it is required for various purpose like tourism and commercial goals where international trade is necessary. The trade is done of forex market which is open for 24 hours for 5 days per week for buying and selling off currencies. The service is used by retail traders, hedge funds, investment firms, businesses and banks. It is currently the most liquid financial market having a daily global turnover of more than US$ 6.5 trillion.

Even a few years ago, this very amount was $5 trillion. There is no central exchange where all the processes take place. All things are done electronically via computers. This is an OTC or over-the-counter market. There are many things to learn about forex if one wants to be a partner. Here are a few things that one must learn when they ask how to be a forex partner (เป็น พาร์ ท เนอ ร์ forex, term in Thai).

Currency trading

Currency trading is a risky thing which also happens to be a complex one. It is much safer and transparent as rouge traders get lesser chances for any kind of wrongdoing. Forex trading is just like any other currency trading process that is done when a person is in abroad. The trader buys one currency and sells another one. The rate of exchange keeps on varying as depending on supply and demand of the currency. Most of the trading is done by institutional traders like people working for multinational companies, fund management and banks. All currencies are given a three-letter code. There are almost 170 types of currencies and each of these has its own code. US dollar is coded as USD and European Union currency is coded as EUR.

Terms to know

There are some important terms to know about forex trading. Currency pair refers to the pair of currencies being exchanged. While there are some common currency pairs, there are also some lesser-known pairs involving the currencies of the developing countries. Pip refers to the percentage in price. It is actually the smallest possible price change within a pair of currencies. Exchange rates are decided by the amount that the buyers are actually ready to pay. This is called the bid amount.

The minimum amount asked by a seller for a currency is called the ask amount. The difference between these two amounts is called the bid-ask spread. A lot is a standardized unit of currencies. Though the typical size is 100000 units, mini lot of 10000 and micro lot of 1000 is also available. As the standardized size of lot is quite large, some traders do not feel fine to put up such huge amount for trading. Leverage allows them to borrow money to participate in a trade. The amount these traders have to put to get leverage is called the margin. It is necessary for anyone to learn these terms and their functions to well to reap the benefits of forex.