What is Forex? How to Start Trading Forex for Beginners
What is Forex?
Forex stands for Foreign Exchange, The forex market is the place where various national currencies are traded, with the aim of making profit from currency exchange rate fluctuations (forex market can be explained as a network of buyers and sellers, who transfer currency between each other at an agreed price).
Forex is commonly known as FX. The FX market is considered as the largest financial market in the world, bigger than the stock market or any other market, with an average daily trading volume exceeding $5 trillion.
How does Forex trading work?
The forex market is run by a global network of banks, spread across four major forex trading centres in different time zones: London, New York, Sydney and Tokyo. Because there is no central location, you can trade forex 24 hours a day, 5days a week.
Currency values changing because of various economic and political factors, including balance of payments, inflation and interest rate changes.
Forex trading is the simultaneous buying of one currency and selling another. So, currencies are traded in pairs (including 2 currencies) the base currency (Front in pairs) and the valuation currency (Behind in pairs).
For example: EUR/GBP pair, EUR is the base currency, and GPB is the valuation currency. If you think the base currency (EUR) tends to be stronger than the valuation currency (GBP) you can place a buy order (BUY or LONG), otherwise you can place a sell order (SELL or SHORT).
How to trade forex?
How to trade forex is quite simple in theory: You only need to buy 1 currency pair at a lower price and sell at a higher price and earn money from that difference. However, the question is: To make money from forex trading, which currency pair should I choose? How to know if the currency pair’s exchange rate will go up or down?
In principle, the exchange rate of any currency pair will depend on the supply and demand of the market. This depends on the economic development (GDP index, inflation .) and the political stability. Therefore, in order to predict the exchange rate of a particular currency pair, you need to have knowledge of fundamental and technical analysis.
What does fundamental analysis mean?
Fundamental analysis is the tracking and updating of economic and political news in the countries which you want to trade.
For example, if you want to trade USD/JPY: You need to know the low unemployment rate in the US’ leads the USD will get stronger, and if there is no news that affects JPY, you should BUY USD/JPY pair and wait for higher exchange rate and take profits.
What is technical analysis?
Technical analysis in forex trading is the study of price movements on a chart of a currency pair or an asset. Technical analysis helps investors and traders assess the possibility of future price changes by looking at historical data and charts of prices or trading volumes.
The use of price charts in FX trading is similar to the analysis in other financial markets such as stocks, cryptocurrencies, Binary options, etc.
You need to know how to analysis candles, chart data to make an accurate prediction.
How much money to start trading Forex?
How much money to start trading Forex ? What’s the minimum amount needed to start Forex trading? There are always questions that beginners learn about forex interested.
The advice for you is to start learning how to trade forex with a free Demo account. All the trusted forex brokers allow you to trade forex with demo account, you don’t need Deposit and still be able to familiarize yourself with forex transactions like real accounts.
After you know how to trade, then trade on your real account for profit! And the minimum amount of capital in real accounts depends on each Forex platform and different types of accounts will have their own rules.
However, with capital from $100, you absolutely can participate in forex trading. And based on your profit expectations, you need a different amount of capital, if you want to earn $1,000, you will need different capital with income of 10k$, 20k$.
Top 3 Most Trusted Forex Brokers – Ratings & Reviews 2020
Nowadays, there are hundreds of different Forex brokers, choosing a trusted forex broker and avoiding scams (Scam) is not easy, especially for beginner. So we have compiled the top 3 best and most trusted Forex brokers in the world so you can safely invest in forex.
The above is full of the concepts, basic guidelines for forex investment, as well as the best and most trusted forex brokers. If you have any comments, please share with us and other investors in this article. Thank you!