Forex is the most liquid market in the world. Almost $6.6trillion worth of transactions occurs every day. If you want to take a dip in the pool, you must understand the essence of forex trading.
In this post, we will walk you through what forex is and how you can start trading it.
What is the forex market?
Forex is a global market where foreign currency exchange takes place. If you ever changed your local currency to foreign, you indirectly became part of the forex market.
Now imagine people from around the world buying and selling currencies for the profit. This is what the forex market is all about. Here you have to trade currencies with pairs like EUR/USD, CHF/GBP, and many more (over 161 currencies).
The market stays open 24 hours a day, five days a week. Due to different time zones on our planet, some experts say that the forex market never sleeps.
The major forex exchanges in the world are New York, London, Tokyo, and Sydney.
What do you need to do?
All trades on the forex are conducted through brokerage firms. These firms provide you with a trading account. Now, there is a live account and a demo account.
On the demo account, brokers will provide you with virtual money. This is the safest way for beginners to start trading. It will allow you to test different strategies without losing any money.
When you think it’s time to move, you can open a live account. In this account, you deposit funds and start trading for profits. This is when it gets real.
There are several live accounts available, like standard accounts, raw spread accounts, and managed accounts.
Every investment needs a plan, and the forex is no different. Let’s take a look at the most popular forex strategies.
This strategy is all about trading in a single day. You buy or sell and close positions within the same day. Day trading is effective when you don’t want a bad impact on your trades overnight.
In this strategy, you need to follow the trend of currency prices. You follow the direction of a particular pair and trade on it.
In swing trading, trades last from one day to one week. This gives you time to rethink your trading approach.
There are also position trading, technical trading, news trading, and fundamental trading.
Best tips for beginners
You don’t have to study the market day and night. This will not lead to anything good, and it will not accelerate your understanding of the trading process. To get started, give the market 1-2 hours per day. Believe it or not, this will be enough.
Before you tempt the whole fruit of success, you have to fall far more than once. We all make mistakes. The important part is to learn from these mistakes. The financial market will teach you to be a diligent, attentive, and abstract thinker. This will help you not only in your trading but also in life.