Forex, also known as FX, Foreign Exchange, or currency trading, is a name given to the global, decentralized market for exchanging currency pairs.
The Forex market is the vast and most liquid market in the world. According to a report submitted by the Bank for International Settlements (a global fiscal bank for national central banks), approximately $6.6 trillion of transactions will be made across the globe in forex trading in April 2019.
The entire history of Forex can be concluded within ten historic developments of the economy.
Forex is a word that is short for Foreign Exchange. It is the most common way of referring to the global foreign currency market. There are several other ways of referring to this market like FX, Foreign Exchange, and currency markets. Forex is a global, decentralized marketplace where individuals and companies can buy and sell foreign currencies, exchanging one for another.
This usually takes place through a Forex broker, as individuals cannot gain access to the markets on their own. Anyone can speculate on foreign currencies, provided that they subscribe to access to the market through a brokerage platform. There are now many Forex brokers to make investing money far easier than it has been before. The International Organisation for Standardisation (ISO) has determined standard abbreviations for currencies.
The idea is more or less the same as buying stocks.
You buy a share of a company if you think the company is doing well and its share will increase in value.
In FX, instead of buying shares of companies, you buy “shares” of countries with the same logic, i.e. currencies.
If you believe that the economy of a specific country is doing well, you expect its currency to appreciate, and therefore, you buy it.
When you buy American shares, you use dollars. When you buy European equities, you use euros. You need money to buy something, even stocks.
Again with money of course. You can buy euros with pounds, dollars with yens, yens with Australian dollars from a good Forex trading platform.
You’ve probably done an FX transaction yourself when you’ve been to a country that uses a different currency than your country.
To make the first trade, a beginner can follow these fundamental steps:
Step 1: Choose a broker and download the meta trader, a platform to execute trading activities from their downloads.
Step 2: Verify your profile by providing all the necessary documents including a PAN card, driving license, or utility bills.
Step 3: Open a live trading account through the traders’ room as it is mandatory to have a trading account to start trading forex.
Step 4: Research and analyze the whole fundamental information about a currency pair. Check regularly the current charts and historical charts and monitor the news for economic developments.
Step 5: Deposit funds into your live trading account as it is necessary to have funds before you open a position.
Now, a trader is all set to enter the market. Select your currency pair and start trading.
Fact Check with Inveslo
Before you get started trading on the Foreign Exchange market on Inveslo, there are a few things you should know:
The majority of Forex trades take place in the spot market, where trades happen at current prices and in real-time.
Forex trading for beginners can be practiced via a forex demo account where you create strategies and test them yourself.
Since there is no limit to trading Forex, one can learn various trading styles through proper education and research. Avoid common trading blunders to make more profitable trades. Understand the market forces through news releases, daily market analysis, and prediction.
One can also follow the strategy of expert traders via Copy Trading as their techniques are tried and tested successfully. Moreover, their in-depth insights and experience are also valuable to execute successful trades.