If you are serious about trading in the forex market, it is imperative for you to have an idea about forex and how it works.

A lot of traders, especially new traders have experienced a rough start in forex trading. This is majorly caused by their expectations and their mentality behind forex trading.

In today’s article, we’ll provide you with everything you need to know about forex. If you are a beginner, you will find this article helpful in learning the rudiments of forex.

What Is Forex Trading?

Forex trading refers to all activities involved in the buying and selling of currencies. Forex can also be called ‘FX’ or ‘foreign exchange’ and it’s a market where people trade currencies for the purpose of making profits.

The world’s biggest financial marketplace is the forex market, this is because different governments, financial institutions and organizations trade on this market.

The forex market is open for trading activities 24/5 – from Monday to Friday. You can only buy and sell any currency you want as long as the market is open.

Just like any other form of business venture, your aim as a forex trader is to make profits from your trades. You will also find other traders who are out to make profits just like you.

When you buy a currency and sell it above what you purchased, you’ve made a profit. In the same vein, if you sell a currency and you purchase the same currency at a lower rate, you’ve made a profit from that trade.

Every country has a currency, these currencies are identified with symbols. For instance, the United States currency is identified with the symbol ‘USD’, and the currency of Great Britain is identified as ‘GBP’.

Currencies are divided into 3 groups in the Forex market which are the Major, Minor and the Exotic currencies. The major countries are known to have the ‘USD’ on each side of the currency pair.

Countries such as United States, European union, United Kingdom, Canada, Japan, Australia, Switzerland, New Zealand which are known to have powerful economy systems have their currencies listed in the category of Major currencies.

On the other hand, currency pairs without USD are considered as minor currency pairs while currency of the group of Exotic Currencies consists of just about all the currencies not included in the Majors and the Minors.

In the foreign exchange market, currencies are grouped in pairs for traders to see the value and the exchange rate of the two currencies.

How To Trade Forex ?

How To Trade Forex ?

As a trader, you speculate on the prices of currencies in the market. Your speculation is based on the possibility of the price of a given currency rising or falling against another currency.

For example, in the EUR/USD currency pair, if you think that the EUR will rise against the USD, then you will have to buy the pair. However, if you think the USD will rise against the EUR then you will have to sell the currency pair.

Conclusion

The role of education and mentorship cannot be overemphasized in forex trading. As a young trader, you need to have access to tools and educational materials. Proper education on forex will help you grow and broaden your horizon in forex trading.

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