Forex Trading For Beginners

Basic Guide to Currency Trading (Forex Trading) & Commodity Trading for Beginners | Motilal Oswal

“Currency and Commodity Trading helps the investors to get connected to the global economy. It also gives that exposure in foreign market and gives benefits out of it. In this video we will be discussing basics of Currency and Commodity Trading.
To begin with the currency market is the largest trading market in the world. Wherein 5 trillion dollars are traded on daily basis. Now the Forex market comprises of investment firms, banks, and Forex brokers, etc. the currency exchange takes place over the counter and the market is open to out the day and five and a half days a week. The currency exchange rate, the rate at which a single currency can be exchanged for another is mentioned as pairs, like for example, USD/CAD which is the US dollar and the Canadian dollar. Now the exchange knit of these currency pairs is affected by the supply and demand and the international foreign exchange market.
Currency Market -There are three ways that trading in currencies is done. The first one is the SPOT market, next is futures market and there is this forward market. With introduction of electronic trading and a plethora of brokers, there has been a huge surge in the spot market. Generally, people refer to the spot market with currencies support at all. The Forward and the Future Markets are both popular that need to hedge their foreign exchange risk. To participate on the OTC, one needs to have a physical exposure to a currency, but on futures platform, there is no such restriction. So basically, the benefit of dealing in the currency market is that it is highly liquid market, wherein one can enter or exit at any time. A trader has the freedom to trade it as many as lots as he wants to. Also, it helps in making a diversified portfolio.
Commodity Market – Here the buying and selling of commodities takes place. There are hard commodities and soft commodities. Hard commodities are those which needs to be mined or extracted like gold. So often the commodities are one which are the agriculture products like sugar, wheat, coffee, etc. Commodity trading like currencies can be traded in the futures market as well as in the spot market. Spot Market is associated with real time prices. Commodities can also be traded in futures market. Here investors deal with contracts to buy and sell the commodity at future date. The most popular ways dealing in the commodities are the commodity futures, ETFs, and mutual funds. These are basically the modern methods of dealing in commodities, wherein the investors need not go for traditional buying and selling to deal in commodities, but to buy the respective ETFs or mutual funds of the companies that have underlying assets as a model. These market instruments work on the performance of the underlying asset, which can either be a single commodity or a group of commodities, both currency and commodity trading requires extremely good knowledge of the global markets and also understand how will that affect the investors trading strategy.

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