What is Forex?

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For those of you who are complete newbies to Forex trading and are trying to learn the ropes, it can often be an overwhelming and daunting world, but it doesn’t have to be.

To put it very simply, Forex, otherwise known as foreign exchange (FX), is simply the practice of exchanging one currency for another.

Have you ever been on a trip abroad and had to swap your Dollars (USD) for Euro (EUR)? Or how about exchanging your British Pounds (GBP) for Australian Dollars (AUD)? If you answered yes, then guess what?

You’ve already had your first experience as a Forex trader, although it’s pretty likely that you didn’t make any money in this trade.

The Forex market that you are here to learn how to trade is made up of a huge decentralized trading network that allows you to trade currencies from all over the world. And when we say huge, we mean enormous.

The Forex market has a daily trading volume of just over $5 trillion USD. This is pretty staggering when you compare it with the stock exchange market that has around $250 billion USD of daily trading volume.

This makes Forex the largest and most liquid trading market in the entire world, so the opportunity to make profits are aplenty! One of the main reasons why it is so popular is due to it being open for business 24 hours a day, 5 days a week.

Don’t worry you don’t have to be glued to your screen all day. The market is closed over the weekend which gives you time to take some rest, reflect on your past trades and step away from the charts for a little while.

Who trades Forex?

Central banks are a very big player in this space as they must try to regulate and control the price fluctuations of their own currency.

The central bank’s decision making, such as their interest rate policies, can bring huge price swings and fluctuations in the market. Their main aim is to stabilize inflation and to stimulate their own economy via the Forex markets and their currencies market value.

Commercial and investment banks are also huge players in foreign exchange. They have their own trading desks where they try to capitalize on price fluctuations and they also hedge their own portfolios.

Corporations are also heavily involved in Forex markets. When they conduct business on a global scale, companies will typically import and export with countries using different currencies than their own.

This means that when they pay for goods and services they must use foreign exchange to do so.

And then there is the retail trader. Psst, that’s us!

There are many different strategies that individual investors employ when trading Forex, but the main objective is typically to gain a profit by correctly forecasting market movements and price fluctuations.

Something to bear in mind – there is a big difference between who trades Forex and who successfully trades Forex, this is particularly true for retail traders. With the aid of this course, we will hopefully be turning you into the latter.

Why trade Forex?

Forex is the biggest trading market in the world in terms of daily trading volume – and by some distance, too. Being the largest market in the world, there is almost always liquidity on a wide range of currency pairs, giving traders almost limitless opportunities to profit.

This liquidity means that you can trade with confidence, knowing that you will always be able to buy and sell your chosen currency pair with ease.

This high liquidity also means it is much harder for market prices to be manipulated and it also benefits traders with very low transaction costs.

The other reason Forex is so popular is that you can trade it 24 hours a day, 5 days a week. It’s one of the most openly available markets in the world.

This allows traders the opportunity to fit their trading around their full time or part-time jobs, unlike the stock exchange where their working hours would likely overlap.

Combining all of these factors together, it gives people the opportunity to make money from wherever they are in the world. It can help people to secure their financial freedom and gives them opportunities that they would not normally have access to.

As long as you have the drive, the will, and the determination, anybody can become successful in the Forex markets – and with the help of this course, we can take you there.

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