Introduction to Forex Trading Basics
If you are wondering; Forex trading is nothing more than direct access trading of various types of foreign currencies. A few years ago, foreign exchange trading was largely confined to large banks and institutional traders. Current technological advances have made it easier so that small traders can also take advantage. Benefit from the many benefits of forex trading simply by using various online trading platforms to trade.
World currencies use a floating exchange rate, and they are always traded in pairs in Euros / Dollars, Dollars / Yen, etc. About 80 percent of all daily transactions involve trading in major currencies.
Four major currency pairs are usually used for investment purposes. They are the Euro against the US dollar, the US dollar against the Japanese yen, the British pound against the US dollar, and the US dollar against the Swiss franc. Right now I will show you how they look in the trading market: EUR / USD, USD / JPY, GBP / USD, and USD / CHF. For the record, you should know that no dividends are paid in the currency.
If you think one currency will value against another currency, you can exchange the second currency for the first currency and be able to keep using it. If everything goes according to plan, in the end, you might be able to make a deal. Rather than you can exchange this first currency for another and then collect profits from it.
Transactions on the FOREX market are carried out by dealers in major banks or FOREX brokerage companies. FOREX is an important part of the world market. So when you sleep comfortably in your bed, traders in Europe trade currencies with their Japanese partners.
Therefore, it makes sense for you to believe that the FOREX market is active 24 hours a day and dealers in large institutions work 24/7 on three different shifts. Clients can place take-profit and stop-loss orders with the broker for overnight execution.
Price movements in the FOREX market are very smooth and without gaps that you face almost every morning in the stock market. Daily turnover in the FOREX market is around $ 1.2 trillion, so new investors can enter and exit positions without problems.
The fact is that the FOREX market never stops, even on September 11, 2001, you can still get double-sided offers on currencies. The currency market is the largest and oldest financial market in the world. This is also called the foreign exchange market, the short foreign exchange market. It is the largest and most liquid market in the world and is mostly traded through the interbank currency market 24 hours a day.
When you compare it, you will see that the currency futures market is only one percent. Unlike the futures and stock markets, currency trading is not centered on exchange. The movement of trade from the main US banking centers to Australia and New Zealand, to the Far East, to Europe, and finally back to the US, this is truly a full circle trading game.
In the past, the interbank foreign exchange market was not available for small speculators due to large minimum transaction sizes and stringent financial requirements.
Banks, major currency dealers and sometimes even very large speculators are the main dealers. Only those who can take advantage of the fantastic liquidity of the currency market and the strong trends of many of the world’s major currencies.
At present, foreign exchange market brokers can break down larger sized interbank units and offer small traders like you and me. Opportunity to buy or sell these smaller units. This broker gives traders any size, including individual speculators or small companies. Option to trade at the same level and price movement as the big players who once dominated the market.
As you can see, the foreign exchange market has gone far. Being successful at it can be scary and difficult when you are new to the game. So, if you want to enter this market, the first thing you do is get the right knowledge and educate yourself until you feel ready to dive.