Forex Trading For Newbies, Day 1 – The Basics of Forex Trading

Welcome to the first day of our five-day eCourse on Forex trading!

We hope that the information we provide in this course will be valuable and help you begin trading confidently in the Forex market right away.

If you would like to jump ahead at any point, you can use the link at the bottom of this article to check out our four-hour-plus video training course.

So, what exactly is Forex trading?

In simple terms, Forex trading is the buying and selling of international currencies. Previously, this exclusive arena was only open to major banking and trading institutions.

However, technological advancements in recent years have opened up the Forex market to smaller companies and even individuals, allowing them to trade currencies online.

The world’s currency rates follow a floating exchange rate and they are always traded in pairs; for example, Eurodollar, Dollar/Yen, etc. International transactions mostly involve the world’s major currencies.

There are a number of major currency pairs when it comes to Forex trading, such as EUR/USD, USD/JPY, GBP/USD, and USD/CHF. These currency pairs are considered major due to their high trading volume compared to other currency pairs.

Currency pairs may also be listed without a slash; for example, EURUSD, USDJPY, GBPUSD, and USDCHF. It is important to note that currencies do not pay dividends.

As a trader in the Forex market, you will look to see whether one currency’s value appreciates against another currency, which will allow you to exchange the latter for the former in the hope of making a profit from the trade.

The majority of Forex transactions are conducted by professionals at major banks and brokerage firms. The Forex market operates almost 24 hours a day and five days a week, with traders at international banking institutions working separate shifts. The Forex market is different from the stock market, as prices shifts are much smoother, and there are no significant gaps.

Each day, the Forex market turns over trillions of dollars, which allows traders to easily enter and exit certain positions.

The Forex market is a dynamic and continuous system that is always in operation, even during significant events such as September 11, 2001. Also known as the foreign exchange market or FX, it is the world’s oldest and most expansive financial market. In comparison, the currency futures market is one percent the size of the Forex market.

Previously, financial prerequisites and high minimum transaction amounts made it difficult for small traders to participate in the Forex market. However, today, Forex market dealers can divide large units within the market, which allows smaller corporations and individuals to trade these smaller units.

The Forex market has evolved rapidly in recent years thanks to high-speed internet connections and sophisticated online Forex trading platforms. This guide is just the first step towards a successful future in trading in the highly profitable Forex market place.

Written by Kenneth A Arnold

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