What is Forex trading?
Factors affecting the Forex market
Why Trade Forex with Us
Forex Trading in Dubai, UAE
Forex trading can be considered the major asset trading that has taken a hit in the online trading business over the past 20 years. Forex trading provides a global market for the exchange of currency pairs in a decentralized environment. It is a risky yet feasible trading option as there is a huge influx in trade and commerce happening all around the world, and considering the world to be a global village, there is sufficient transaction of international currencies. The core of forex trading can be the simultaneous buying and selling of foreign currencies. It is the most liquidated market on the trading front and accounts for a total average turnover in a day exceeding 6.6 trillion USD. Traders make profits in the forex market by using speculation to buy and sell international currencies.
How Does Forex Trading Work?
Trading in Forex is always done through currency pairs. The currency pair is made up of two components; the base currency and the quote currency. In this pair, you sell one currency to purchase the other currency. Traders make profits in forex trading in Dubai, UAE or anywhere around the world by predicting or forecasting the price movement of a certain currency pair. Seven Capitals, one of the leading UAE Forex brokers offer you hundreds of different currency pairs. The common and trending currency pairs are USD against Euro, USD against Japanese Yen, British Pound against USD, etc.
The essential components of currency pair trading are:
Base Currency: It is the first currency in the currency pair and is quoted on the left.
Bid Price: The bid price is the price at which the trader is set to sell the currency. It is usually given in real time.
Quote Currency: The second currency in the currency pair. It is always on the right.
Ask Price: The ask price is the price at which the trader is ready to buy the currency. The ask price is also given in real time in the live market.
There are different types of currency pairs as well:
- Major Currency Pair: Major currency pairs are the ones who drive the forex market. They account for over 80% of the currency pairs traded in the forex market. Major currency pairs have high liquidity and have lower spreads.
- Cross currency pairs: These currencies do not include the US dollar. They are considered to be minor currency pairs and comparatively less liquid than the pairs that US dollars is included i.e.., major currency pairs.
- Exotic Currency Pairs: These currency pairs have one developing economy’s currency pitched against the US dollar. Exotic currencies are riskier to invest in; they are highly volatile and less liquid when compared to cross currency pairs and major currency pairs.
Factors that Affect Forex Trading
The forex trading market, as it is, can be considered a volatile system. It requires careful consideration while planning to invest in forex trading in Dubai or anywhere else. Here are some general factors that affect forex trading:
- Interest Rates
When interest rates are increased by countries on their national currency, it eventually results in higher interest payments and creates a greater viability for profit growth. This interests traders in buying more of such a currency. However, when interest rates fall, there are no payment spikes and fewer opportunities for profit. This eventually leads to less value for the currency.
- World Events
As the world is now a global village, issues pertaining to countries can have varied effects on forex trading. Events that are geopolitical, like elections, can have an impending effect on the international currencies. A positive effect can lead to increasing the need for one currency better than another, and if there are negative national events, they can depreciate the currency at its best.
- Inflation Rates
A country with lower inflation rates can witness better value and appreciation for its currency. The prices of goods and services in the country will only rise at a gradual and slow pace. A country with a high inflation rate has a highly depreciated currency value.
- Economic Stability
A stable economy is perceived as low risk and can attract foreign investors, and its currency is regarded as significant by forex traders. A weaker economy has a shaky foundation and low development rates, which causes them to withdraw from investments and hence becomes a riskier opportunity for investors and decreases the currency value as well.
- Government Debt
Governments all over the world are indebted to each other in one way or another. Governments take debt to enhance the infrastructure and promote structured development in their countries. But, when there are high debt rates, it can lead to higher inflation rates and hence lower value for the currency. When public debt is comparatively on the lower side, there is a decline in the inflation rate and also better development that takes place to stabilize the economy and hence a better appreciation of the currency.
- Central Banks
A country or a nation depends on a central bank to formulate and scrutinize the commercial banking industry prevailing in their respective country. They also play an important role in stabilizing the economy and controlling the inflation rates in an economy. They decide on various policies concerning the financials of a country and therefore create a make or break in terms of appreciation or depreciation of currency value.
Benefits of Forex Trading with Dubai Forex Brokers
- Having margin trading capabilities.
- Higher levels of liquidity
- Prices change spontaneously in response to political or business related events.
- Trading permitted for 24 hours a day from Monday to Friday.
- Ability to go short and long
Why Choose Seven Capitals for Forex Trading in Dubai?
Seven Capitals, one of the best UAE Forex brokers has mastered the field of forex trading in Dubai, UAE and has been giving solicited advice and guidance to its customers all over the globe since 2012. As a customer, by choosing a UAE Forex broker like Seven Capitals for your forex trading in Dubai needs, you are giving yourself access to exclusive features. Being one of the trusted Dubai Forex Brokers, Seven Capitals allows its customers to trade in 50+ currency pairs in the forex market. We also provide round-the-clock guidance for all our clients so that they do not feel at a loss when making appropriate financial decisions concerning their forex trading.