INVESTMENTS
INTRODUCTION TO FOREX TRADING
What is Forex?
The global electronic market for trading foreign exchange and currency derivatives is known as forex (FX). Despite lacking a central physical location, the FX market has the highest trading volume and highest level of liquidity in the world, with billions of dollars transacting daily. The majority of trade is carried out via financial institutions, brokers, and banks.
With the exception of holidays, the FX market is open five days a week, 24 hours a day. Although there may be less trading volume, the FX market is open on many holidays when stock markets are closed.
KEY KNOWLEDGE
What is Forex Market?
Currencies are exchanged on the foreign exchange market. The most distinctive feature of this global market is the absence of a central marketplace. Rather, over-the-counter (OTC) electronic currency trading is carried out. This implies that instead of taking place on a single, centralized exchange, all transactions take place among dealers throughout the globe via computer networks.
The market is open five and a half days a week, 24 hours a day. The main financial hubs of Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich are the global hubs for currency trading, spanning nearly all time zones. This implies that after the U.S. trading day concludes, the currency market opens in Tokyo and Hong Kong. With price quotations fluctuating all the time, the currency market may be quite lively at any one moment.
How To Start Trading Forex?
- Learn about Forex: Forex trading is a task that needs certain expertise and a dedication to study, even though it is not difficult.
- Setup a Brokerage Account: You will need a forex trading account at a brokerage to get started with forex trading.
- Develop Trading Strategy: While it is not always possible to predict and time market movement, having a trading strategy will help you set broad guidelines and a road map for trading.
- Always be on top of Numbers: Once you begin trading, check your positions at the end of the day. Most trading software already provides a daily accounting of trades. Make sure that you do not have any pending positions to be filled and that you have sufficient cash in your account to make future trades.
Basic Forex Trading Strategies
- Scalp Trading:
- Day Trading:
- Swing Trading:
- Position Trade
A scalp trade consists of cumulative positions held for seconds or minutes at most, and the profit amounts are restricted in terms of the number of pips.
Day trades are short-term trades in which positions are held and liquidated on the same day. The duration of a day trade can be hours or minutes.
In a swing trade, the trader holds the position for a period longer than a day, like days or weeks.
In a position trade, the trader holds the currency for a long period, lasting as long as months or even years.
Forex Terminologies
Accounts that allow you to trade up to $1,000 worth of currencies in one lot.
Accounts that allow you to trade up to $10,000 worth of currencies in one lot.
Accounts that allow you to trade up to $100,000 worth of currencies in one lot.
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