This article looks at trading on the foreign exchange market, the information you can receive from an FX converter and the cost of the FX converter.
When trading on the foreign exchange market, it is highly recommended that you consider using an FX converter. These devices are not only tools to convert currencies at present foreign exchange rates; but certain converters will also provide chart information on market movements. It is important to know the services a converter is offering before you utilise it. This is to ensure it meets your trading requirements.
The foreign exchange market
The foreign exchange market is a virtual environment where one foreign currency is exchange for another foreign currency. All trading is done via currency pairs where the first currency is known as the base, and the second currency presented is known as the counter. The base currency generally has a price of 1 unit.
Trading on the foreign exchange market can be completed in two ways:
1. The online trading platform
Trading via the online trading platform is the most commonly used method among retail traders. This type of trading can be done from any location; all you need is a reliable computer and internet access. The online trading platform is available from forex brokers and operates on a real time market. It is recommended that you test the different platforms before using them as platforms vary in the services they offer. It is important that you are comfortable with your trading platform and that it meets all your trading requirements.
2. The forex brokerage service
While many opt for the online trading platform method, some traders prefer to trade through a forex brokerage. This is very much like trading on the stock market as the broker will be trading on your behalf. This is not a popular method as the trader does not have control over his trading capital or the trades being executed.
The currencies available on the FX converter
While the foreign exchange market allows for all global currencies to be traded, not all currencies are available for conversion. Unfortunately, there are very few FX converters that are able to convert the majority of currencies and the average number of currencies present is 150. It should be noted that there are FX converters offering much less than this 150 average, but the majority of the popular converters adhere to this number. One can safely say that all the converters will accommodate the major currencies and this easy access to major currency information is why new traders are advised to trade major currency pairs.
The cost of an FX converter
One important task to complete before using any trading tool is to check the cost. It is vital that you weigh the price of the device against the service it will be providing. More often than not, the FX converter can be utilised free of charge; however, there are some requiring a minimal fee. These are generally the more sophisticated options, and you must determine whether or not the cost is worthwhile.