6 thoughts on “Forex Beginner”

  1. What is Forex?
    The foreign exchange market – also known as forex or the FX market – is the world’s most traded market, with turnover of $5.1 trillion per day.*

    To put this into perspective, the U.S. stock market trades around $257 billion a day; quite a large sum, but only a fraction of what forex trades.

    Forex is traded 24 hours a day, 5 days a week across by banks, institutions and individual traders worldwide. Unlike other financial markets, there is no centralized marketplace for forex, currencies trade over the counter in whatever market is open at that time.
    How FX Trading works

    Trading forex involves the buying of one currency and simultaneous selling of another. In forex, traders attempt to profit by buying and selling currencies by actively speculating on the direction currencies are likely to take in the future.
    World’s Major Currencies
    COUNTRY SYMBOL COUNTRY SYMBOL
    United States USD Switzerland CHF
    Eurozone EUR Canada CAD
    Japan JPY Australia AUD
    Great Britain GBP New Zealand NZD
    Learn more about which currency pairs to trade.
    Want to know more about how to trade forex?

    Our free Let’s Get to Know Forex guide will cover how to get started, help you make your first trades and outline how to create a long-term trading plan for long-term success.

  2. How to Trade Forex ?
    Four steps to making your first trade in forex.

    Now that you know a little more about forex, we’ll take a closer look at how to make your first trade. Before you trade you need to follow a few steps.
    1. Select a currency pair

    When trading forex you are exchanging the value of one currency for another. In other words, you will always buy one currency while selling another at the same time. Because of this, you will always trade currencies in a pair.

    Most new traders will start out by trading the most commonly offered pairs of major currencies, but you can trade any currency pair that we have available as long as you have enough money in your account. For this walkthrough, we’ll look at EUR/USD (Euro/ U.S. Dollar).

    2. Analyze the market
    Research and analysis should be the foundation of your trading endeavors. Without these, you’re operating on emotion. This doesn’t typically end well.

    When you first start researching, you’ll find a whole wealth of forex resources – which may seem overwhelming at first. But as you research a particular currency pair, you’ll find valuable resources that stand out from the rest. You should regularly look at current and historical charts, monitor the news for economic announcements, check indicators and perform other technical and fundamental analysis. We’ll talk more about specific types of research later on.

    3. Read the quote
    You’ll notice two prices are shown for currency pairs. For example, a quote for EUR/USD may look like this.

    trading concepts quote

    The first rate (1.07173) is the price at which you can sell the currency pair. The second rate (1.07191) is the price at which you can buy the currency pair. The difference between the first and the second rate is called the spread. This is the amount that a dealer charges for making the trade.

    Spreads will vary among dealers. FOREX.com offers competitive spreads on the wide range of currency pairs offered. View our live spreads.

    4. Pick your position
    If you’ve traded stocks, bonds or other financial products, you know that you can usually only speculate on the one direction of the market: up.

    Forex trading is a little different. Because you are buying one currency, while selling another at the same time you can speculate on up and down movements in the market.

    WITH A BUY POSITION you believe that the value of the base currency will rise compared to the quote currency. If you’re buying EUR/USD, you believe the price of the euro will strengthen against the dollar. In other words, you believe the euro is bullish (and the US dollar is bearish).

    WITH A SELL POSITION, you believe that the value of the base currency will fall compared to the quote currency. If you’re selling EUR/USD, you believe the price of the euro will weaken against the dollar. In other words, you believe the euro is bearish (and the US dollar is bullish).

    Let’s see how these would work. Imagine that you did some research and decided to enter a trade.
    ENTERING A BUY POSITION

    The current price for EUR/USD is 1.33820/840. You believe that the euro is bullish, so you decide to enter a buy position for one lot of the EUR/USD. Because you are buying, your trade is entered at the price of 1.33840.

    buy graph

    Now, let’s say that later in the day, you look at your position. The EUR/USD is now at 1.34160 / 180. Your trade has gained 32 pips. You decide to close your position at the current sell price of 1.34160 and take a profit.
    ENTERING A SELL POSITION

    Let’s imagine that you believe that the euro is bearish. You decide to enter a sell position for one lot of EUR/USD. Because you are selling, your trade is entered at the price of 1.33820.

    sell graph

    You look at your position later in the day and discover that the EUR/USD is now at 1.34160/180. Your trade has lost 36 pips. You decide to close your position at the current buy price of 1.34180 and accept your losses.

  3. When can I trade forex?

    You can trade forex 24 hours a day, five days a week. The foreign exchange markets are worldwide and therefore follow a 24-hour global timetable.

    When Can I Trade Forex
    The trading week for forex begins on Monday morning in Sydney, Australia and follows the sun westward as the world’s major capital markets open and close from Tokyo to London and finally closing on Friday evening in New York.
    Unique benefits of a 24 hour market:
    React to global trading opportunities whenever they arise
    Trade when it’s convenient for you
    Take advantage of periods of higher volatility when markets overlap
    Forex trading involves significant risk of loss and is not suitable for all investors.

  4. Why trade forex?

    Forex is the most traded market in the world and when you understand the benefits of the market, it is easy to understand why.
    24 Hour trading, 5 days a week

    Unlike other markets, forex trading doesn’t have to stop when the sun goes down. Since forex is traded all over the world, trading markets are open 24 hours a day, 5 days a week, so you can trade when it is convenient for you.

    When Can I Trade Forex
    No commissions or hidden costs

    The costs of trading at FOREX.com are included in the spread—there are no hidden fees or commissions, so you can be confident knowing how much your trade is costing you.
    Trading opportunities in bull and bear markets

    The forex market offers traders the unique advantage of trading opportunities in both rising and falling markets. And unlike other markets, there are no restrictions or additional costs for short selling.
    Trade more with less

    Forex is traded with a degree of leverage, allowing you to take a position in the market with a fraction of the capital you would usually need. As much as leverage may increase your gains, it can also increase your losses so it’s important that you understand the risks of trading on margin.
    Unmatched liquidity

    With daily turnover reaching $5.1 trillion,* forex is the most liquid market in the world. This liquidity often results in more actionable prices and unlike other financial markets, traders can respond almost immediately to currency fluctuations, whenever they occur – 24 hours a day, 5 days a week.

    What is forex
    Wide range of markets

    Forex trading allows you to easily gain exposure to markets around the world. While most trading is done in the world’s major currencies, you also have access to emerging markets such as Mexican Peso (MXN) and Polish Zloty (PLN).

    * April 2016 Interbank Forex Market average daily volume from Bank for International Settlements.

  5. Trading Concepts
    factsheets for currency traders
    Download
    What’s inside:

    Like countries, every currency has its own personality and identity. This guide will give you detailed facts on major currencies, including:

    U.S. Dollar
    Australian Dollar
    Euro
    British Pound
    Canadian Dollar
    Swiss Franc
    Japanese Yen
    New Zealand Dollar
    Excerpt
    The Dow Jones Industrial Average (DJIA) is perhaps the most-recognized trading name in the world, and the USD/JPY has been closely following it over the last few years.

  6. Forex Liquidity And Volatility

    You’ll often hear it said that the forex market is the most liquid financial market in the world, and it is. But what does that mean for you and your trading?
    What Is Liquidity?

    Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they’re trading. One reason the foreign exchange market is so liquid is because it is tradable 24 hours a day during weekdays. It is also a very deep market, with nearly $6 trillion turnover each day. Although liquidity fluctuates as financial centres around the world open and close throughout the day, there are usually relatively high volumes of forex trading going on all the time.
    There are usually relatively
    ¥
    high volumes of forex trading
    going on all the time

    What Is Volatility?
    Volatility is the measure of how drastically a market’s prices change. A market’s liquidity has a big impact on how volatile the market’s prices are. Lower liquidity usually results in a more volatile market and cause prices to change drastically; higher liquidity usually creates a less volatile market in which prices don’t fluctuate as drastically.

    Liquid markets such as forex tend to move in smaller increments because their high liquidity results in lower volatility. More traders trading at the same time usually results in the price making small movements up and down. However, drastic and sudden movements are also possible in the forex market. Since currencies are affected by so many political, economical, and social events, there are many occurrences that cause prices to become volatile. Traders should be mindful of current events and keep up on financial news in order to find potential profit and to better avoid potential loss.