Introduction

Forex is defined as the foreign exchange markets where the banks and other financial institutions are linked together electronically. They convert the currencies of different countries and also fixes the rate of the currencies. It helps us to know about the currencies, which is expensive and which is the cheapest. The forex market is the largest market of the whole globe. It trades the largest economy ever known. In a single day it trades about $1.9 Trillion. It is the biggest trade in the entire world. As forex market is the electronic market, it is easily accessible to the whole world. So, the uses are also increasing day by day. Forex trading is being the popular market. As it is easy to use, the number of the user is also increasing. The multinational companies, banks and other institutions are using this process. Thanks to the PC and internet which make it possible and easier.

Then you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position. However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.