Forex Trading Is Not Confined To One Lot Increment

Category: Finance.

Currencies are the money of different countries and currency trading is the exchange of buying and selling of these currencies. The actual exchange rate between the two markets is done through forex trading.

Forex( FOReign EXchange) trading is one of the popular ways of trading in the currency markets. The most popular forex market is the Euro to US dollar exchange rate that trades the value of one Euro in US dollars. Forex markets differ from day trading markets in that forex markets are decentralized and are not provided by an exchange. Since forex markets are global markets, they trade round the clock. The trades are directly between two traders and there could be many different exchange rates for the same currencies depending upon the location of the traders and the brokers being used. This is a margin amount and the individual traders need not be anywhere near the lot size in trading their account since the forex broker would offer the lot size instead. The currencies are traded directly in a forex market and the minimum amount that can be traded is known as a lot, which is at least 25, 000 dollars generally.

The forex markets have a very high liquidity, which is the amount of money traded, and therefore they are able to absorb large trades worth millions of dollars without the market being affected. In a forex trading, traders can place up to 100 lots at a time and can also place stops, trailing stops or limits on open positions or have them preset on market orders. If a person has several million dollars to trade with and wants to convert one currency to another indefinitely, forex trading is well suited. Sometimes they are traded with zero commissions and fees. Clients are able to trade. 5 of a lot. 2 lot or any amount where each lot is equal to 100000 currency units. Forex trading is not confined to one lot increment.

It is possible for trading managers and funds to trade multiple customer accounts from a single window and a block order can be split up among multiple customer accounts as specified by the trader. If the margin is low, there is more flexibility without getting a marginal call. Also traders can open positions in the same currency in the opposite directions without using any additional margin or without the positions offsetting. The failure in online forex trading can be attributed to various factors like: Over trading: the trades should be considered well before trading because each faculty trade may drain equity. It is advisable not to risk a high percentage on a single trade. Bad money management: the risk can be overcome using stop loss orders since single bad trade may nullify the whole year s patient smart trade.

Lack of knowledge: having a basic knowledge and equipping oneself is imminent before plunging into forex trading online. Websites offer a wide range of demo account, which can be practiced and utilized. The knowledge and education of a trader play a vital role between the success and failure in the forex market. Online forex trading offers a great opportunity for profits but with a high degree of risk. Therefore proper knowledge and guidance are essential for a beginner to take on online forex trading.

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