Foreign exchange, also known as foreign exchange and foreign exchange market, is the place where currencies are traded. Currencies are important to people all over the world.
What is forex trading?
Currencies are needed to exchange for doing foreign trade business. It is the largest and most liquid market in the world. It scales individual markets, even with the general exchange estimation surrounding share trading systems.
It is a worldwide decentralized market for the exchange of monetary forms. This market decides distance trading. The major members in this market are the large universal banks. There are many types of buyers and sellers in this market.
The Forex trading market is unique because of the following features:
Huge exchange volumes, dealing with the largest resource class on the planet promoting high liquidity; continuous work, 24 hours a day, with the exception of weekends;
• Geographical spread;
• Continuous operation, 24 hours a day except weekends;
• A variety of factors that affect exchange rates;
• Low margin of profit compared to other markets;
• Use of leverage to increase profit and loss margin.
For the ideal of perfect competition the forex trading market is known as a market closet.
With such a large number of experts being inseparable with forex exchange, there are some dangers associated with it that must be considered.
One should make sure that their internet connection and computer are running very smoothly at all times. We all know that things happen, servers go down and our PCs freeze or shut down depending on the current activities. This may affect the transaction so be aware that things can happen during trading.
There are also risk free accounts that allow you to practice without losing your money.
The Forex trading market is always there 24 hours a day, 7 days a week. It doesn’t matter your time, location, internet connection and a computer, you can login to trade with me at any time.
It’s scalable. With this feature, traders can be able to control and limit their risk based on their account.
Leverage is a great advantage of the forex trading market, where brokers allow you to trade up to 2% of the total contract size as compared to the stock market. One can use small account to trade big size where the win can be quite big and you only need small capital to achieve it.
Data and software are provided free of charge; You do not need to pay, all you have to do is log on to your broker’s website. Download the software, charts will be displayed once you log in.
There is no commission; Well you pay in spread costs depending on how much you trade.
As an individual, you face a lot of competition from large financial foundations with specially designed traders investing millions of dollars in programming and equipment.
Unlike the stock market there is no centralized exchange house. The broker acts as an exchange which makes him a market maker.
You will experience huge losses if you have no idea about capital risk and how to calculate leverage.
Good traders trade with just 2% starting capital and no more.
The forex trading market moves differently throughout the day, there are only a few peak hours that are worth your time trading.
Trading on margin also comes with its own high level of risk which should be avoided by the smart trader. Always evaluate the amount of your capital and risks when trading.
Never enter into forex trading with an amount that you cannot afford to lose.
It is also your commitment to look into all the risks that come with forex trading before your first exchange.
Leverage is one of the biggest risks in forex trading. It can bring huge profits if you are winning, but on the other hand, can result in huge losses if you are losing.
Forex trading in islam.
This is a difficult question to answer conclusively according to Islamic law. Money trading is halal under specific conditions as indicated by Islamic experts although there is some question as to the exact conditions.
This implies that any kind of deal that involves the element of interest is strictly prohibited according to Islam. Forex trading is not permitted in Islam and is defined very broadly. The retail forex trader shows the market by paying or charging enthusiasm between two halves of any money match whose positions remain open for a medium term. It would seem acceptable only as long as it (exchange) is from hand to hand. Prophet Muhammad (peace be upon him) had in mind the exchange of different types of goods. It would be made between two parties, assuming that it was a natural aspect of commerce.