How to start Trading Forex.
Forex is a global foreign currency market, where currencies of different countries can be purchased and sold at the favourable exchange rate. Currency means national monetary units issued and managed by central banks of those countries. Forex market participants are commercial and central banks of different countries, financial corporations, large and small investors. Currency prices on this market are changing every second. Their volatility depends on the political situation in one or another country, global economic news, relevant events and general market tendencies.
The word ‘forex’ is a combination of two words – ‘foreign’ and ‘exchange’, which means ‘to exchange foreign currency’. The Forex market was formed in 1970s, when the global system of fixed exchange rates was replaced by the floating exchange rate regime. The Forex market is the largest financial market in the world with its daily turnover currently exceeding USD 5 trillion. This market is available for trading around the clock, five days a week.
Currency is purchased and sold online via platforms offered by brokers. A currency broker operates as an intermediary between the buyer and the seller. On request of the customer, the broker executes currency purchase or sale transactions, can grant a credit for trading purposes. The currency broker quotes on his platform many popular currency pairs.
The most popular currency pairs are EUR-USD, USD-JPY, GBP-USD, AUD-USD, USD-CHF, etc. The U.S. dollar (USD), the euro (EUR), the British pound sterling (GBP) and a few more currencies are the reserve currencies of the world. They are used for global trading, are highly trusted by the global community and, therefore, their pairs are the most popular among the Forex market participants.
In order to trade on the Forex market, you do not have to leave the home, visit a bank or a broker’s firm. You can engage in currency trading being at home or in the park just by connecting to the broker’s platform with your computer or phone. The question is – how does it work? Suppose that you have euro in your broker’s account. So, you have to decide what currency you would like to buy for a certain amount of euro. In this case, your base currency is the euro. The broker posts real-time exchange rates of currency pairs on his platform. For instance, the most popular Forex pair is EUR/USD. In this case, USD is the quoted currency. There are two prices posted. The first (lower) price is the price at which you can sell your base currency, and the second (higher) price is the price at which you can buy your base currency. The currency pair price on the broker’s platform is presented as follows: EUR/USD 1.2000 1.2004. In this case, if you sell one euro, you will get USD 1.2000, and if at the same second you want to buy one euro, it will cost USD 1.2004 for you.
According to the above provided example of the currency pair (EUR/USD 1.2000 1.2004), if you sell your euro for USD 1.2000 and seek a positive return, you would have to repurchase the euro for USD 1.1999 – for the amount which is by one percentage point smaller than the amount spent by you for the sale. In the case at issue, the currency pair on the broker’s trading platform would be as follows: EUR/USD 1.1995 1.1999. Given that you already have USD 1.2000 purchased earlier, you will get for them EUR 1.00008, instead of EUR 1.
All you need in order to start Forex trading is to register on the broker’s website, align some formalities, transfer to the account assigned to you by the broker the investment capital earmarked by you and start trading. In order to receive return from trading follow investment nuances, keep track of the market and news, feel the market pulse together with millions of other investors. Try professional trading on the Forex market with the platform offered by the broker.
General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.