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What is Forex?

What is Forex? What does currency pair trading mean?

Forex is a market in which the national currencies of different countries are traded. Forex has no specific location and it is an electronic network based on Internet technology between banks, brokers, financial institutions, and traders; That traders usually trade through brokers or banks.

The word FOREX stands for Foreign Exchange, which indicates the nature of this market.

Why Forex Trading?


Many financial institutions, organizations, and legal and real investors in general, such as small traders, meet their financial needs by changing the value of currency pairs in the Forex market. The nature of making a profit by changing its value is as follows:

  • Buy at a low price and sell at a high price
  • Sell at a high price and repurchase at a low price

The features of the Forex market that we will mention below will encourage investors to trade currency pairs in the Forex market.

What are the features of Forex market?


The Forex market can be considered one of the largest financial markets. This market has the highest amount of liquidity with an average daily turnover of $5 trillion. The Forex market also allows you to trade 24 hours a week, except on holidays.

Forex is safe and legal!

In many First World countries, all financial markets including Forex and its trading are legal and safe! All reputable brokers are certified by regulatory agencies and there is no need to worry about your capital in the Forex market!

What is currency pair trading?


Currency pairs Trading is a specialty and activity in the field of macroeconomics. In order to operate properly and make a profit, traders must be fully acquainted with the economic concepts so that they can have a correct analysis according to market conditions and trade in the direction of market movement. As you can see, currency trading is a highly specialized business in one of the financial markets, Forex.

Be careful in the capital market!

Unfortunately, for various reasons, including low knowledge, people lose their capital and blame the Forex market! Any activity in the capital market requires sufficient expertise and knowledge. Please make sure you know before entering any trading position.

Forex trading is a bit more difficult than stock trading, because traders have to look for information related to the economies of different countries and their relationship with each other, and the volume of information is a little more than stock market transactions and information of different companies.

How currency pairs are traded in Forex


Generally in Forex trading, a trader buys or sells one country’s currency against another; But there is no physical exchange of money and only one trading position to change the value of the ratio of these two currency pairs, is opened for the trader at the price selected by the trader and with changes in value in the trader’s trading position, profit or loss is recorded.

Buy trading position

Forex trading position simply means making a profit from an uptrend.

Sell trading position

Forex trading position simply means making a profit from a downtrend.

In Forex currency trading, one currency is always traded against another. If you sell a currency, you buy another currency, and if you buy a currency, you are selling another currency. In currency pair trading, profit is obtained by changing the value and price in the direction of the trader’s trading position.

Start Forex Trading


If you are interested in currency pair trading, here are some tips to get you started in Forex:

Knowledge and Education

The most important indicator for your success is sufficient education and knowledge related to examining the value of countries’ currencies. Prioritize macroeconomics education, price chart technical analysis, and fundamental analysis.

1- Education and knowledge in the field of macroeconomics

The value of each country’s currency is determined according to various indicators such as unemployment statistics, net and gross production rates, and so on. To get this information, just follow the economic calendar, but analyzing this information requires knowledge of macroeconomic concepts!

2- Technical analysis of price chart

Technical analysis of price charts helps you to examine price behavior. Investigating price behavior provides information such as identifying downtrends or uptrends, whether the price is expensive or cheap according to past information, etc., which will help you in trading or investing decisions according to your analytical knowledge.

3- Fundamental analysis

Fundamental analysis is a way to examine the intrinsic value of a currency and compare it with the current price to arrive at a probable future price. The main purpose is to examine the fairness of the present value of any currency or asset and is generally classified into two categories: qualitative fundamental analysis and quantitative fundamental analysis.

The study of news, information on the domestic economies of countries, the study of political relations and international economics, etc. are all categorized in fundamental analysis.

Choosing the right broker

Brokers provide technical conditions for forex trading in individuals and legal entities.

What are the features of a Forex trusted broker?

The choice of brokers depends entirely on the country and residence of the trader; But there are features and indicators that define a standard broker, and when choosing a forex broker, be sure to consider the following:

Crediting and overseeing reputable financial institutions such as the FCA UK
Legal and simple deposit and withdrawal
Updated Trading Panels (MT4, MT5)
Standard spreads and leverage
Standard Trading Rules
Fast support and compatibility with your language
History without penalty and violation of the law
The legality of the activity and the regularity of the company

These indicators are the most obvious indicators for a reliable broker. As you have already read, sufficient knowledge is the first principle of Forex trading. If you see something in the list above that you are not familiar with, please search and gather enough information.

The right mindset is the key to your success!

Try to emulate the successful personalities of the financial markets.

The right mindset for traders

How you think and make decisions in the Forex market will make a profit or a loss. Studying biographies, educational books of famous people in the capital market will help you to be more successful.

By constantly studying, you will learn how a successful trader can make the right decisions and not be fooled by the easy appearance of trading in your financial markets. You have to admit that trading in financial markets is a job like laboratory engineers, and the features of this monetization model (for example, the absence of an employer or forced working hours) do not have the wrong mental imagery for you.

The end words


At Adaas International Investment, we hope you find the answer to the question “What is Forex?” Comprehensively by reading this article. You can help us improve by sharing the article “What Is Forex Market?” Published in Adaas Investment Magazine, and help optimize this article by submitting your comments.

References

FAQ

What is Forex?

Forex is a market in which the national currencies of different countries are traded.

What are the features of the Forex market?

The Forex market can be considered one of the largest financial markets. This market has the highest amount of liquidity with an average daily turnover of $5 trillion. The Forex market also allows you to trade 24 hours a week, except on holidays.

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