Forex Market Basics – What a Newbie Should Know

Any of your dreams associated with the Forex market, can become a reality. Forex potential is inexhaustible. But be prepared for the fact that this is one of the most dangerous segments of the financial market. Here they lose even faster than they earn. And in order not to replenish the “bench” in the very first days of independent trade, you need to know several important fundamentals.

What is Forex?

Forex is a market of interbank currency exchange at free prices, which was created in 1971 to replace the Bretton Woods international monetary system, which pegged the exchange rates of the US dollar and other convertible currencies to the “gold standard”.

Since the creation of a new model of the international monetary system, currency exchange has begun to be carried out at market prices, which depended solely on the levels of supply and demand trades.

Forex Market Basics

Today Forex has grown to gigantic proportions. The average daily trading volume reaches $ 10 trillion, and in addition to Central banks and other institutional participants (investment banks, corporations, etc.), private traders have become participants in the trading, that is, we are with you.

The Forex market functions as a single network of currency exchanges, interconnected by electronic communication channels, providing liquidity of trading and round-the-clock access of market participants to currency exchange and speculation on their exchange rate differences.

What is the point of trading on Forex

The absolute number of bidders at Forex, enter the market with one goal – to make money. And they earn this money by speculating on exchange rate fluctuations of exchangeable currencies during exchange trading. What is the meaning of speculation? Buying currencies at the lowest price and selling currencies after a certain time at the highest possible price. It’s simple. This is what you have to do if you decide to become a currency trader , that is, a participant in the currency market.

Currency and currency pairs – how is currency exchange?

Due to the fact that Forex carries out currency exchange operations, that is, the exchange of one currency for another, currency pairs are used in the purchase / sale transactions (currency pairs in a huge number of combinations). Thus, if you decide to make money on the exchange difference of EUR and USD, and you need to buy EUR by selling USD, you buy EURUSD pair (you buy EUR, which is paired in the first place while selling USD, which is in second place) . Conversely, if you want to sell EUR and buy USD, you sell a pair of EURUSD (EUR is sold, which is paired in the first place while selling USD, which takes the second place in a pair).

Currency and currency pairs on Forex

Due to the fact that in the Forex market, any of the world’s convertible currencies is presented in pairs with other convertible currencies, you can make deals with a huge amount of trading instruments using numerous currency pairs.

Therefore, if you have heard the term “currency pairs”, know that the combination of the exchange difference between two currencies is meant. Couples give an idea how many units of one currency can be bought at the expense of units of another currency-pair.

You can open a trading account that is used to buy one currency pair and sell other currency pairs in USD, EUR, RUB and other popular currencies.

Therefore, if you use, for example, EURGBP, CHFJPY, CADSGD, and your account is opened in US dollars (USD), when buying such currencies, the broker will automatically convert your USD to the currency in which the transaction is performed. But the commission for such a conversion is charged the most minimal. It is included by the broker in the size of the spread or the total commission and does not actually affect the trading result.

How to start trading Forex

Access to the foreign exchange market Forex for self-trading is carried out only through specialized brokerage companies that provide their customers with the necessary software, leverage, the withdrawal of their transactions to the foreign exchange market, technical support and so on. ( more about forex brokers ). After registering as a client of a brokerage company and opening a trading account, a trader is able to enter into transactions in Forex, that is, to make a profit by speculating on currency fluctuations. It is important to choose a brokerage company whose trading conditions (leverage, bonus, training for beginners , copying transactions successful traders, etc.) will help you start trading with a relatively small amount of funds and start earning money very soon.

How to choose the best and most reliable broker? Use our rating of brokerage companies , with the help of which you can choose the best broker for training and a quick start.

How to start trading Forex

Forex is not only trading

The advantage of the Forex market is not only that you can earn money on it by buying the cheapest currency pairs and selling the most expensive currency pairs. In fact, in order to make a profit on Forex, it is not necessary to trade on your own. Not everyone can become successful traders. But to earn in this market can each of us!

How is this possible? It’s simple! In Forex, you can invest in the most successful traders or learn from the experience of the most successful. Such capabilities are implemented through the following tools:

  • PAMM-investing (investing in PAMM-accounts , PAMM-indices , active investor accounts )
  • Copy trades successful traders .
  • Trading with Forex-robots .

PAMM investing is investing your money in the trading of successful traders. At the sites of most brokerage companies, PAMM-accounts ratings have been created in which you can choose the best management traders and invest your money in their trading. That is, to provide them in trust management. Managers of PAMM-accounts will use them in their trading operations, and make a profit, and you will get most of this profit by paying the manager a specified percentage of the commission.

Copying transactions is a system for copying transactions of the most successful traders who trade on the sites of brokerage companies. In this case, you don’t need to invest your money anywhere. After you select a trader in a special rating to copy his transactions, all his trading operations will be copied to your trading account, which means you will start earning exactly the same as a successful trader.

Copying Forex Transactions

Trading with the help of Forex-robots is an automatic type of trading, which is carried out by the trader through special software applications to the trading platform. Trading robots can be found for free on thematic forums on the Internet or purchased on specialized exchanges. Our site has a section “ Forex Advisors ” in which you can find a suitable advisor for you. Having decided to entrust your funds to the trading program, treat this issue as scrupulously as possible, and it is better to purchase a robot.

Trading with Forex Robot

How much can you earn on Forex

Of course, any of us would like to earn at Forex at least $ 1 million per year. We want to please you – it is possible and at the same time to disappoint – perhaps, but not immediately. Miracles do not happen, and even Forex is not able to instantly satisfy your global desires. Here, also, as in any other sphere of human activity, in order to earn well, you need to “sweat” well.

How much can you earn on Forex

Thinking about how much you can earn on Forex, you should know the following:

Earnings in the Forex market is proportional to investments. The average income that can be obtained during trading on this market is about 100% -150%. Thus, if your initial investment in your own trading is about $ 200, then in a year your trading capital will increase to only $ 400- $ 500. On the other hand, you can hardly find another kind of financial activity that can increase your capital by 100% per year.

The higher the profit, the greater the risk of losing everything. There are traders who are able to increase capital by 1000% per year. But with this style of trading proportionally increases the risk of losing everything. In fact, Forex is exactly the place where the proverb works best – “you go quieter – you will continue.” Here they earn 100% -150% per year with conservative risks and in 8-10 years become dollar millionaires. Or they earn 1000% a year and are left with nothing in a year or two. What style of trading is right for you? While you are thinking about this issue, we will continue to discuss with you the basics of Forex.

Forex does not forgive amateurishness. Trading on Forex is impossible without prior education and training. Yes, you will spend time on training, which will distance you from the moment you start self-trading and making a profit. But, on the other hand, will allow you to really start earning. In other words, if you started trading without professional training, there can be only one outcome of the trading – loss of capital, after which you will still have to return to training or even leave Forex currency trading market altogether.

Where can I get training in Forex? Start with our training course or use the training courses offered by brokerage companies. Your opportunities in the Forex market are endless, but in order to use them, no training is necessary!

findings

If you are just starting your way to the Forex market, most of what we said in this article is a wonder for you. In fact, everything is very simple. Experience and skills will come to you with time, and very soon you will begin to understand all this better than professional bidders. Have patience, go through quality training, or get a good trading robot or choose worthy PAMM accounts for investment and make your dreams come true. We see no reason why you should be an exception and the Forex market will refuse to open up to you limitless horizons of financial opportunities.

Author: Jackson

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