What is Forex Trading?
Forex, short for
foreign exchange. Forex is the global market where currencies are bought and
sold. It's the largest financial market in the world, operating 24 hours a
day, 5 days a week.
Forex Global Market:
Forex is a
decentralized market, where transactions occur over-the-counter (OTC)
between various financial institutions and individuals.
Currency Pairs in Forex:
Forex trading involves exchanging one
currency for another, typically in pairs. A currency pair is the quotation
of two different currencies, with the value of one currency being quoted
against the other. For example, a trader might buy EUR/USD, meaning they are
buying Euros and selling US dollars. There
are hundreds of different combinations to choose from, here is major currencies pairs-
EUR/USD or the Euro vs. the U.S. dollar
USD/JPY or dollar vs. the Japanese yen
GBP/USD or the British pound vs. the
dollar
USD/CHF or the Swiss franc vs. the
dollar
AUD/USD or the Australian dollar vs.
the U.S. dollar
USD/CAD or the Canadian dollar vs. the
U.S. dollar
What are the Base Currency and Quote Currency?
The base currency is always on the left and the quote is
always on the right. For example EUR/USD where EUR is Base Currency and
USD is Quote Currency.
Key Forex Market Participants
Banks & Financial Institutions (largest players)
Central Banks (influence rates via policies)
Corporations (hedging against currency risks)
Retail Traders (individuals trading for profit)
Major Forex Trading Sessions
The market operates 24/5, with four major sessions:
Sydney (opens first)
Tokyo (Asian session)
London (most liquid session)
New York (high volatility)
How to Start Forex Trading
Learn the Basics – Understand pips, lots, leverage, and spreads.
Choose a Reliable Broker – Look for regulation (FCA, ASIC, CySEC).
Open a Demo Account – Practice risk-free with virtual money.
Develop a Trading Strategy – Use technical & fundamental analysis.
Start Small & Manage Risk – Use stop-loss orders and avoid over-leveraging.
Common Forex Trading Strategies
✔ Day Trading – Open & close trades within a day.
✔ Swing Trading – Hold trades for days/weeks.
✔ Scalping – Profit from small price movements.
✔ Position Trading – Long-term based on fundamentals.
Risks of Forex Trading
High Leverage (can amplify gains & losses)
Market Volatility (unpredictable news events)
Scams & Unregulated Brokers (always verify brokers)
Final Tips for Beginners
✅ Start with a demo account
✅ Use risk management tools (stop-loss, take-profit)
✅ Avoid emotional trading (stick to your strategy)
✅ Keep learning & stay updated (economic news impacts forex)