Monday, 22 September 2014
David Rycott Discusses How the Foreign Exchange Market Works
There are a number of differences between forex trading and the type of trading that goes on within the stock market. In the stock market, buyers and sellers interact on a centralized market exchange, where prices are easily manipulated. This manipulation occurs when there is an imbalance between buyers and sellers, causing an overflow of stock that cannot be sold. There are various methods the exchange might use to cause this issue, but ultimately what happens is that there are barriers to entry into the marketplace. This kind of centralised control is why David Rycott prefers forex trading.
While forex is not regulated centrally like a stock exchange, it still has some structure, in the form of banks and brokerage services. These entities interact with one another, and also compete between each other for additional shares of the market. It is important to learn more about these key players in the forex market by looking at sources like forex trading information from David Rycott.
The basics of forex trading are fairly simple, despite the hierarchy behind it. A trader will purchase a certain currency at a certain rate, with the expectation that the rate will change in the future, allowing the trader to exchange that currency back and earn a profit. This involves comparing a base currency with a quote currency that the trader is considering, and then keeping an eye on that ratio moving forward for a chance to earn a profit. Having a good transaction means determining whether the trader wants to buy or sell, which involves determining if a currency is going to rise or fall in value. There are many other nuances that a trader must learn and consider in order to become successful at forex trading.