What Is Forex Trading? A Beginner's Guide to Those Who Say How to Win

 You have read some publications about Forex markets or heard a few things from somewhere and now you are wondering how to make money on thi...

 You have read some publications about Forex markets or heard a few things from somewhere and now you are wondering how to make money on this live market, but you probably don't know where to start.

Don't worry, you've come to the right place, because in this guide we will tell you about the most basic points of the market, explain Forex simply and simply, and give you enough information to take the first step into the exciting world of currency trading.

We have prepared this guide for those who are just thinking about entering the Forex market, but do not know where to start, taking into account the presence of a large number of complex resources on the Internet. We have deliberately kept the explanations quite simple and understandable for everyone to understand, so that you can understand the basics of this market.

We hope that this guide will help you understand the basics of the forex market, such as what forex is, what it means, how it works and what instruments can be traded on the market. Of course, we still wish that you will find this information useful, and with this first step you will become a successful trader who can make transactions on your own in the future.

What Is Forex Trading A Beginner's Guide to Those Who Say How to Win

What Is Forex Trading?

Forex is a common term used to describe the concept of foreign currency exchange. It is also called currency trading or just FX trading, and you can Dec see that it is called Spot FX.

 

Essentially, Forex refers to a trade conducted on various currencies around the world. Forex is slightly different from trading stocks or shares, because in this market currencies are traded against each other. By this we mean, that is, you are replacing the currency of one country with the currency of another country. Everything is so simple in sight.

Although Forex seems to indicate an area where foreign exchange transactions are made in terms of the name it receives, in fact, not only foreign exchange transactions are made in this market. In addition to foreign currency, commodities such as gold, world-famous stocks and various stock market indices are also traded on the Forex market. Wait for now and put up with us for a while longer, because we will also talk about other instruments other than currencies traded on the Forex market in detail.

What are the Advantages of the Forex Market?

The Forex market has very wide advantages. Although it is the most liquid market in the world, the daily trading volume is at the level of trillions of dollars. The Forex market has provided the opportunity to trade on the movements of currency pairs, as well as provides the opportunity to trade for stocks, commodities and stock market indices with CFD contracts.

Trading on Forex does not require high costs and commissions. However, thanks to the possibility of leverage in this market, large positions can be opened with a low capital. In addition, the possibility of two-way operation can also be used. Thus, both the fall and the rise of prices can be profited from.

A Liquid, Large and Global Market

Forex is the most liquid market in the world, working 24 hours a day, 5 days a week. If we need to give an example of what we are trying to explain with this, the average daily trading volume of the Forex market is about $ 5.1 trillion. This transaction volume corresponds to an average of $ 220 billion per hour. For example, the New York Stock Exchange, one of the most popular stock exchanges in the world, takes 30 days to reach a one-day Forex trading volume.

These figures are really huge and extraordinary! There is no other way to describe it. However, this does not affect the average trader like us much, except for giving a solid liquidity in the Forex market. On the other hand, there is absolutely zero chance that these daily trading volumes will affect the market direction of average traders like us again. Nevertheless, we think that you should know that the market provides very good liquidity and has an incredibly large size.

24-Hour Trading 5 Days a Week

Since the Forex market works 24 hours a day on weekdays without interruption, it does not have very large gaps, which can become a common problem in stock trading. Let's try to explain what we mean by a small example.

For example, you may have purchased the ABC stock at a price of 24.20 pounds on Monday, just before the market closed, and you may have set up a stop-loss order at 23.50 pounds to protect against possible large losses. Suppose that at night, when the market closed, there was a major development that affected the company, and on Tuesday morning, ABC stock opened for trading at 22.10 pounds. Not only did the stock fall by 2.10 pounds overnight, but it also fell below your stop-loss order, causing you a much bigger loss than you expected, such as 1.40 pounds.

It would be wrong to say that this situation will definitely not happen in the Forex market, because it can happen, albeit rarely. If we say that this can happen, especially on weekends, because it is the only time when the Forex market is closed, you can also choose to only rarely open positions on weekends to avoid such problems.

Commission-Free and Low Transaction Costs

In general, Forex brokerage firms make money on their differences between buying/selling, which are determined by currency pairs, that is, what we Decipher as spreads. Brokerage firms October do not charge any other commission or additional fees, except for this. This, in turn, allows you to make transactions without paying commissions.

Spreads are usually low, and this makes forex trading relatively inexpensive. However, when choosing a brokerage firm, you should not forget to study all the relevant details and get information from the institution, as some may also receive a fixed fee or a variable commission.

The Possibility of Leveraging

Among the main advantages of Forex, the availability of the lifter is perhaps the most attractive, Dec it allows you to open a high position with a relatively small amount of capital. Forex leverage ratios are expressed as 1:10, 1:30 and 1:50. Well, what does this mean? Take, for example, the leverage ratio of 1:30. If you are using leverage of 1:30, this means that you can make 30 transactions for every 1 pound of your capital.

In our country, the Capital Markets Board (CMB) has made an arrangement on this issue. Following this regulation, the maximum leverage ratio that brokerage firms in our country can offer for Forex transactions has been limited. Although it currently varies according to instruments and collateral, the leverage ratio you can use is currently a maximum of 1:10.