Spot Forex
The Foreign Exchange (Forex) market is a 24-hour market and the largest market in the world, with trades amounting to more than $3 trillion every day. Spot Forex like CFDs are cash settled, the differences between the opening and closing values of the underlying currency are cash settled rather than physical delivery. Most spot forex trading is speculative, with only a low percentage of market activity representing governments' and companies' fundamental currency conversion needs. The spot forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Trading spot forex, like CFDs, has no expiry and your position can be held as long as you wish.
Spot Forex Explained
Currency trading is the simultaneous buying of one currency and the selling of another. For example the Euro/US dollar or the GB pound/Japanese yen, where the currencies in each pair have an inverse relationship. Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. Clients can trade the forex markets in major currencies such as the Euro, US dollar, Japanese yen and GB pound.
As a spot forex investor, you can trade the market anywhere in the world regardless of the time zone. As the largest financial market the forex market cannot be manipulated by large buyers or sellers and offers very smooth and noticeable trends compared to be available in other markets. Additionally it provides leveraging opportunities and hence the ability to control a large position with minimal initial outlay. The spot forex market is the market that has huge institutional participants and high net-worth individuals.
Through Knights Capital Markets, you are given the opportunity to invest in over 120 global currencies and reap all these advantages and economic benefits associated and known to forex trading:
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Tight spreads
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Real time profits
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24 hour trading
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Leverage trading
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Noticeable market trends
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Economic data sensitive
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High liquidity
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Risk management tools through different order types
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Market commentary
How they work
The forex market are traded in pairs, the relationship between the currencies in the pair are inverse. So a currency could be rising in value relative to the other currency dropping in value and vice versa. Example of a currency pair are EUR/GBP, NGN/USD or GBP/AUD.
When you buy (long) a currency in a pair, you are buying the first currency listed in the pair and simultaneously selling (shorting) the other and vice versa. Basically forex trading is the simultaneous buying of one currency and the simultaneous selling of the other. For example, for the pair, EUR/GBP, when you buy (long) the EUR, you’re simultaneously selling the GBP. When the EUR rise in value against the GBP, the result is a profitable position and when the GBP falls in value against the EUR, the result is also a profitable position. Anything contrary will result in the position incurring a loss.
