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Have you ever heard of currency trading or trading in currency? We think most of you must be knowing about it. Trading in currency is the largest market on the planet. The magnitude of trading in currency exceeds all other equity markets in the world combined. As you must be knowing that all currency has got a relative value in comparison to other currencies on the planet. Trading in currency aims in purchasing and selling of large quantities of currency so that it could leverage the shifts in relative value into a profit making and you can extra cash.Past few months our own exchanges in Indian stock market that is BSE and NSE has also started currency trading.
Fluctuation In The Value Of Currency
There is always a fluctuation in the value of currency. There are mainly two reasons why value of a currency fluctuates. The first reason is due to the “real market” where outside visitors or investors wish to buy things within a country and they are forced to convert the currency they have or the domestic currency into the currency of the country in which they are buying within. Likewise when money leaves the country, people need to sell their currency for their foreign currency that they need to invest abroad.
The second reason for fluctuation in the value of currency is “speculation.” Now what is speculation? An investor will buy or sell when they feel that a given currency would act either strongly or weakly. This is the reason why speculation has a drastic consequences on a national currency and consequently on the economy of the country.
Benefits Of Trading In Currency
Trading in currency has got many real benefits like the stock exchange over equity trading. The spreads for trading in currency makes the cost to the trader very low as they are extremely low. As the volatility of the currency market is extremely high, traders can generate a huge amount of return on a given exchange
The currency trading market was very close to small investors. However in the past years, new technologies have given way to investors of all types. This is the main reason why people opt for trading in currency.
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