A Brief Explanation of Forex Trading
The basic question for people who have just heard or first discovered about forex is what is Forex Trading and how to make money from ‘there’?
What is Forex?
The abbreviation of two syllables, namely Foreign Exchange, which means is Foreign Exchange, which is often called the “Forex” market. This transaction volume is larger than other stock exchanges and markets, of course.
What is traded on the forex market? The easy answer is currency, and it can be said more precisely is the exchange rate of a currency. The most traded currency is the United States Dollar (USD) because it is a global currency.
Whereas the major currency pairs in the forex market are Euro vs. Dollar (EUR / USD); British Pound (GBP / USD); Japanese Yen (USD / JPY); and Swiss Franc (USD / CHF).
Advantages of Forex Trading
Leverage: When you trade on the Forex market, small margins (funds) can allow you to get a bigger profit than your capital many times over.
Liquidity: Because the Forex Market is very large, it is usually very easy to make sell and buy transactions very quickly. This means that at the click of a mouse you can quickly find ways to get money.
Can Buy and Sell: One of the most interesting advantages of the Forex market is making a profit by buying or selling a currency pair.
24 Hours: From Monday morning to Saturday morning, the Forex market is open and without pause in 5 full days. Of course you can as often as possible have the opportunity to earn money without stopping.
Demo account: An account that you can use for free to practice and not risk losing money.
In Forex Trading, there are bid prices and ask prices, and the difference between the two is called a spread. Bid is the price at which the buyer is willing to buy, and Ask is the price the seller is willing to sell.
Currency pairs or pairs are pegged at prices in 4 or 5 digit numbers. For example, EUR/ USD is displayed at bid price 1.3746 and ask price is 1.3749, where the spread is 3 pips.
A buy / long position (buy) is when we buy 1 currency in front (EUR) with 1.3749 currencies behind (USD)
The position of sell / short (sell) is when we sell 1 currency in front (EUR) with 1.3746 currencies behind (USD).