Trading in simple language – Everyone knows Trading. This event happens every day in the lives of all people, even though they may not be aware of this fact. But what is meant by online trading in financial markets?
Principles of Trade is a process of exchanging a single object with other objects. In everyday life, everyone to exchange their money for things they want to buy. Talking about trading the financial markets, the same principle applies. If someone is acting in the Forex market, so he bought a currency for other currencies. If the price of the purchased currency rises, the entrepreneur can generate a profit by selling the currency pair at a higher price and the reverse. This is the main principle of the market to buy something at a specified price and then sell at a different price – in the hope that the price will rise. Why do prices change in the market?
Forex is like goods generally
Suppose a currency pair in the Forex is like goods generally in the mainstream market. The price of goods will increase their presence (procurement) and their demand for goods. The greater the demand on the item, if available purchase clearly in the market, the higher the price of these goods. This can be easily explained by the similarity of the purchase of food.
Suppose you decide to enter the market to buy apples, and only the remaining 10 apples and you can not buy an apple in the other place. If you then it is likely the vendor will sell the apples the only buyers in the market, at a price that makes sense. If the situation is different and, for example, there are 15 people who joined Apple wants to buy fruit market. With a view to the desired apple before buying to get others, people are willing to buy these fruits with a higher price. Therefore, the sellers will get a chance to raise the price of the apple, because the demand for apples to be higher than its availability in the market.
If the price levels where customers feel the price is reached too high, they can stop buy. So the seller needs to stop the rise in prices or even lower in order not to lose customers. But let’s take another situation in which a large number of customers, which demands that attract more sellers in the market. With the increasing number of sellers, increased availability of goods and price to price competition takes place among the sellers about AvaTrade.
This causes a drop in prices because customers interested in buying goods in’re the lowest price. This award is the “market”, held at a time when balancing the demand in the market availability, the seller and the customer is sold agree on a price and a certain quantity of apples (items). For example, the seller agrees with the customer to 5 apples to sell at a price of $ 10. The concept of “supply and demand” is the same in the Forex market. But in this case, large banks (liquidity provider) and traders played the role of the seller and the customer and the currency pair is used as money and goods.
Nowadays, anyone can participate in trading on financial markets because it allows to trade anytime, anywhere via the Internet. This is the reason for the popularity of trading in a wide range of financial instruments such as currency pairs, metals, equities, commodities, CFD, options and more.