What is forex trading

Forex can be breaked down into foreign currency and foreign exchange.

Currencies are being exchanged for various reason either for travelling, commercial purpose and many more.

A trader buys one currency and sell another. The exchange rate constantly fluctuates based on supply and demand.

We can't go fully into forex trading without discussing what the forex market is all about.

The forex market isn't a physical place where trades takes place, instead trades are done electronically via a computer networks among traders worldwide.

Currencies are being traded on the forex market and it is always open 24 hours a day.

The market is opened from monday to Friday, that is the major days the market opens, it also opens half a day on suday.

Who are those that participate's in the market:

The participants that participates in the forex markets are institutions, commercial banks, Investments, commercial banks, Investment banks and lastly the retail investors around the world participates in the forex market.

The market works on different time Zone. It is traded on major financial centers of London, New york, Tokyo, Hong Kong, Paris, Singapore.

As said earlier the market works on differents timezone:

• Sydney opens 9:00pm closes 6:00 am UTC

• Tokyo opens 12:00am closes 9:00 am UTC

• London opens 7:00am closes 4:00 pm UTC

• New york opens 1:00pm closes 10:00 pm UTC

The forex market is the largest and most liquid financial market in the world. It is estimated that an average global daily turnover of more than $6.5 trillion is done daily.

Now what are always traded on the forex market? Simple..... Currencies.

Currencies are always traded on the forex market.

Currencies are always traded in pairs, (Example the EURUSD).

The currency pairs is made up of a base currency and a quote currency: You sell one to purchase another.

The price for a pair is how much of the quote currency it costs to buy one unit of the base currency. You can make a profit by correctly forecasting the price move of a currency pair.

Example of this is: If a forex trader buys U.S dollars against the Euros(EURUSD)he or she believes that the dollar would strengthen in value against the Euro.

Note: Why i made use of the U.S dollars is because it is involved in a vast majority of forex trading.

Currency pairs are usually presented with the base currency first and then the quote currency. Secondly, If you should see a pair like this EURUSD, EUR is the base currency while USD is the quote currency.

We have three different ways of trading forex:

• The spot market: This is the primary forex market where those currency pairs are swapped and exchange rates are determined in real-time, based on supply and demand.

• The Forward market: Instead of executing a trade now, Forex traders can also enter into a binding (private) Contract with another trader and lock in an exchange rate for an agreed upon amount of currency on a future date.

• The futures market: Similarly, traders can opt for a standardized contract to buy and sell a predetermined amount of a currency at a specific exchange rate at a date in the future. This is done on an exchange rather than privately, like the forward market.

The forward and futures market are used by forex traders who want to speculate the future price changes in a currency.

Now in forex trading we have some terms :

• Pip. A pip refers to the smallest possible price change within a currency pair.

• Lot: Forex is traded by a standard unit of a currency.

• Leverage: Leverage is a term whereby a trader borrows money to allow a trader to participate in the forex market.

Margin: Since trading with leverage isn't free traders must put down some money upfront as a deposit.

How to Start Trading Forex Now here is how you can start trading the financial market forex

• Learn about forex: Forex trading is not complicated, you can learn about it and understand the does and don’t.

• Brokage account: You would surely need a broker to work with if you want to start trading the market. The broker helps in holding your money and keeping it.

• Develop a trading strategy: While it is not always possible to predict and time market movement, having a trading strategy would help you set broad guidelines and a road map for trading.

•Always be on top of your numbers: Once you begin trading, check your positions at the end of the day. Most trading software already provides a daily accounting of trades. Make sure that you do not have any pending positions to be filled and that you have sufficient cash in your account to make future trades.

•One important thing as a trader you have to work on is your emotion. The psychological part is the Hardest part. Work on it and grow yourself.

Komolafe Peter Adedayo

Pelegists website is all about getting the latest news on finaces, cryptocurrency and also those seeking to invest and have no idea on how to go about it.subscribe to this page and get the latest gist around the world and many more. All news posted here are true details as we would not post untrue news With time we hope to become the internet most trusted source of informations for Finaces and business growth all round the world

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