The Forex market is the financial market where currencies are traded. It enables traders and investors alike to benefit from the fluctuations in the exchange rates of currencies. Apart from the speculative benefits it offers, it also works by the principles that guide the exchange of currencies at airports, between importing and exporting corporations, and between banks.
The Forex Market.
For example, when you travel from one country to another, you have to exchange the currency of the country you are leaving for the currency of that country you are going. So, if you are going from the United States to Switzerland, you will have to change the United States Dollar (USD) you have with you for Swiss Franc (CHF) that you will be spending there. This is an example of participation in the Forex market at the individual level.
Multinational corporations also participate in the Forex market. A Japan-based automobile manufacturer, for example, that sells most of its cars to the United States will also have to engage in Forex. Although it will sell its cars in Yen, American users will buy them in dollars which will then be converted into Yen. This is Forex.
Even, to protect themselves against exchange rate risks, those multinational companies maintain pools of those currencies they mostly transact in. For example, the Japan-based manufacturing company, if it buys raw materials from Australia, Japan, and the United States, may also keep the currencies of those countries for itself as a hedge against the risks associated with having to exchange currencies from time to time.
The Forex market is large. According to the Bank of International Settlements (BIS), trading in it reached $6.6 trillion in April 2019 up from $5.1 trillion three years earlier. However, that is its total size. The speculative segment of the market, known as the Retail Spot Forex Market, accounts for just 5-6% of that. That is roughly $400 billion of the total market size.
Being speculators, we are concerned with the Spot Forex Market. The participants in this segment are of two broad types: retail and institutional traders. Both, unlike corporations and travellers, therefore, do not buy and sell currencies for commercial reasons. Instead, they do so strictly for profits, that is, just to profit from the fluctuations in their relative prices.
While retail traders are ordinary individuals who access the Forex market online, from their computers, via electronic trading platforms, institutional traders are the pension funds, hedge funds, mutual funds, and insurance companies that trade currencies on behalf of their clients. Even though retail Forex traders now hold a substantial portion of the Forex market membership, the market is still largely dominated, in terms of capital size, by the institutional investors.
Retail Forex Trading
As earlier explained, retail Forex trading makes up just a small portion of the Forex market in terms of capital. However, it is arguably the largest in terms of the number of participants. You and hundreds of thousands like you who have been attracted to the market because of its tremendously huge profit potential belong to its category. With a laptop or a convenient mobile device, you are able to access the Forex market and profit from it.
However, Retail Forex trading is fraught with a lot of challenges and risks, and you should know how to adequately manage them. Of course, they can be adequately managed if you will be willing to take certain precautions such as learning as much as you can, developing the right attitude, adopting sound risk and money management tactics. However, one way to do all these at the same is by using Forex trade signals.
Forex trading signals are trade recommendations that are delivered in the form of SMS, email, RSS feed, blog post, or even social media post. They are created in two major ways: via the instrumentality of experienced Forex traders and analysts and through the use of programmed software. These two ways have also correspondingly given rise to the two types of them: manual and automated Forex signals.
Forex signals, since their emergence, have continued to help many profit from the Forex market. Even though the market is dominated by the big-wig institutional investors who have got the capital and technological edges, they have opened up a new vista of profitability for many retail traders who, without them, would never have had any hope of achieving Forex trading success considering the statistics that most Forex traders actually fail in the trade.
Therefore, if you do not want to fail, you are implored to adopt their use. In fact, starting to use Forex signals might end up becoming the most important decision you will ever make for your trading career. So, why wait for a second longer?
While the use of a Forex trading signal service is advised, it is important you use one that will make your trading results better and not worse. There are many acclaimed signal providers out there, but only the services of a few of them are reliable and can be confidently used. That is why you should carefully make your choice. But do not worry. We have gone through the hard work to do that for you.
1000pip Builder is a signal provider with over 10 years of experience. Its independently-verified Forex trading signals are delivered to their subscribers wherever they are – whether at home or on the go. In addition to the signals they provide, 1000pipBuilder also offers mentorship and a community to anyone that joins their service. You can do that here now. And you will definitely be happy that you did.