What is Forex?
Forex (Other commonly used abbreviations: Fx, Fx market, currency market ...) is a global decentralized market for the trading of currencies, thus the place where supply and demand meet after currencies. The global Forex markets consist of the currency of almost every country, and are traded 24 hours a day, 5 days a week. Forex traders can operate from anywhere (even from home, thanks to P2P, which is the essence of modern fx market)! It is one of the largest markets in the world, where one currency is traded for another. Forex trader (Fx trader) will buy a currency pair if they expect its exchange rate will rise in the future and sell a currency pair if they expect its exchange rate will fall in the future. A big benefit to forex trading is that you can buy or sell any currency pair, at any time subject to available liquidity. So if you think the Eurozone is going to break apart, you can sell the euro and buy the dollar and conversely. Forex has built-in advantages over other types of investment. In the Fx market, an investor can gear up or “leverage” in a way that is not possible in most other asset classes. Fx market is usually regarded as high risk for private investors but in the current economic climate it is becoming a more attractive option. One of the unique aspects of the Forex market is that the volume of trading according to the Bank for International Settlements (2012) estimated at US 4,9 trillion per day.
Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade, business and popular, not less important speculative activities.
How to trade forex?
Forex trading is primarily done online through software (are among the most popular Metatrader (MT4, MT5) Visual Trader (VT), Ninja Trader, etc.) or web-based trading platforms. If you have access to a personal computer or a cell phone, you most likely have everything that is required to trade forex. Fx market in itself is the same as any other: stock market, commodity market, or the one that is near your house. All of them have similar features; the difference is only in the goods offered and the methods of making a deal. Fx trading enables you to speculate on the future direction of currencies through buying or selling the exchange rate of one currency against another, with the aim of making a profit. Your job as a Fx trader is to buy or sell currency at a cheaper rate and sell it at the more expensive. The difference in price makes your fx profit.
How to earn money with forex? Since it might be a bit complicated for a beginner to figure out how to make money in Forex, we offer you this example:
( In these examples, the spread is not taken into consideration)
You believe that the Euro to US Dollar (EURUSD) rate will increase or reduced, and on your balance you got 150 USD. At the price of 1.3550 (USD for one EUR) you buy or sell 10,000 Euro for 10,000 * 1.3550 = 13,550 USD (to the selected a leverage scale of 100:1 (100*100+security to the opposite change of course). This is possible because of the credit (leverage scale), which allows you to make transactions worth 100 times more (with traders normally dealt leverage from 1:10 to 1:500 and individual) than funds available on your balance.
Do you think, based on fundamental, technical and psychological analysis EUR will go up! Buy for 10,000 euros and 13,550 is sold for 1.3700 EUR / USD (ie for $ 13,700), the difference is the profit (13,700 to 13,550 = 150 USD). In our case of 100%.
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| How to trade forex |
Why trade Forex?
Forex trading has become very popular in the past decade because it offers traders a large number of business benefits. Traders are abandoning the traditional stock and future markets and moving to Forex in surprising numbers. Forex market has been referred to as the market closest to the ideal of perfect competition, ruled by supply and demand influencing economic development, notwithstanding currency intervention by central banks. Why trade forex:
- liquidity: is a largest global decentralized market for the trading of currencies, is three times larger than global stock market. According to the Bank for International Settlements (2012), the forex market is traded about 4.9 trillion (4900000000000) USD / day. Even the largest of transactions are conducted within milliseconds.Liquidity mainly comes from the banks and large brokerage houses (market makers) which offer currency exchange services to large multinational companies and investors. Between market makers include, for example, Citibank, Deutsche Bank, Barclays Capital and many more.
- trading: Trading goes on all around the world during different countries' business hours. Forex markets consist of the currency of almost every country, and are traded 24 hours a day, 5 days a week. You can trade from Sunday 21:05 (GMT)(± 17:00 EST) to Friday 21:00 (GMT)(± 16:00 EST). The Forex market has no directional bias as do most stock markets, equal opportunities to profit in rising or falling markets (buying or selling shop / market trend). Another substantial advantage of forex trading is leverage and low margin that ranges from 1:10 to 1:500 or individual (dependent on trader / dealer), margin ± 1% ($ 1,000 = $ 100,000 contract). Great advantages of Forex is the low costs, You pay only the difference between bought and sales (from 1 pips /$ 10 at 100,000 contract/). The forex price movements are predictable, or its transparency. This means it is easier to analyze the inner workings of the market and figure out what is driving it (economic governance, policy, land management, and the like). Forex is an easy way to gain exposure while avoiding vagaries such as foreign securities laws and financial statements in other languages.
- ease of entry: since 1999 the forex available to all "even small traders". Nowadays merchants offer micro, mini, classic or business accounts (from $1 - million USD).
Forex traders can operate from anywhere (even from home, thanks to P2P, which is the essence of modern fx market)! Last but not least advantage, no constraints on the number or type of transactions.
Forex
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