It is fair to say that Forex is the most important financial market available today, with a daily turnover of over $4 trillion. Some of you may also know it by the name of foreign exchange.
Forex is the ability to buy or sell the world's currencies in exchange for another. It ends up creating such a huge market in the world, so it's no wonder that so many people are trying to succeed in it.
For example, the total amount of money traded here daily far exceeds the entire GDP of many countries.
It is also worth noting that the foreign exchange market is one of the most liquid markets on the planet. The trick behind it is during business hours. It does not matter if it is day or night, Monday or Sunday, the markets will be active, which means that you can trade at any time! There are no restrictions. The main difference from the stock market (apart from the above mentioned) is that forex is traded between persons holding currencies and not through the stock exchanges. Of course, there are peak hours when most forex traders are online.
All newcomers who want to give it a try should learn a few basic things before opening an account. The first and key one is currency pairs - the most important component of the entire market.
The value of one particular currency compared to others is measured by the movement of the price of a currency pair
Currently, currency pairs are divided into major, minor and exotic. The number of potential currency pairs on the market is not limited, but of course there are the most common, usually from the five or six largest economies of the world (the majors). Minors do not have pairs that include first-tier currencies.
Some of the most popular exotic pairs at the moment are the Hong Kong dollar, the Chinese yuan, the Russian ruble and so on. We recommend that those who are new to forex trading stick with the big ones. "Many betting sites are now also offering financial betting, as currency trading is of interest to many punters," said Ethan Rowe of leading UK site Exness. "In the end, this is not surprising, as there is a very thin line between trading and gambling," added Rowe.
How trading really works - bid, ask prices
All foreign exchange trading platforms offer two basic options - Bid and Ask Prices. Bid is when participants simply quote their price to buy a particular currency. Prices change a hundred times a day, which makes the whole process even more interesting. The movements, of course, are caused by supply and demand in the market.
The bid price is a function used to inform others of the price at which a particular currency pair can be sold. As with the Bid function we mentioned above, the Ask price is also subject to many fluctuations! The basic idea of making a profit here is to buy a currency when it falls or hopefully bottoms and then re-sell it at a much higher price when it stands up.
Some of the most common forex trading terms you need to be aware of
If you find yourself in a group or forum of people who are already experts in forex trading, or at least have a couple of months of experience, you may come across some terms you haven't heard of before. Some of them, which we are going to mention below, can be crucial to long-term success, so make sure you fully understand them before you trade anything.
Where to start
The first thing you need to do before you make your first trade is to open a Forex brokerage account. There are so many brokers available now, and the vast majority of them have an amazing welcome offer for new traders. Set it up, complete your registration, fund your account, choose a strategy and you're ready to go! We always encourage our readers to start building up their bankroll slowly, which means smaller deposits and less risk. Time is of the essence when it comes to forex success, as well as experience.
Forex trading has many advantages over the stock market or similar activities. As mentioned, their market is open 24 hours a day, seven days a week. It does not matter where you are located. If you have an internet connection, you can trade without any problems. Some of the other advantages we would like to mention are high liquidity, very low transaction costs (no clearing fees, exchange fees or legal taxes), leverage and no middlemen.
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