HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Real Forex Trading: Find Out What All the Fuss is About


The market for trading forex or foreign currencies is known as foreign exchange trading, or forex trading or FX. The largest market in the world, forex, and what happens in it, influence real, everyday life. For example, unpredictable price movements, depreciation of a currency, or the appreciation of another currency, can affect the cost of everyday goods, make imports or exports cheaper, and influence consumers’ spending power. Money does make the world go round and has a significant impact on our lives.

What is Forex Trading?

Forex traders usually register with a CFD forex broker or forex trading brokers who have built a reputation in the industry. Many online forex brokers and traders should pick one that provides all the resources and tools they need or find essential, as well as one that can provide services to their country. Good reputable online forex brokers provide all the necessary information to open an account and to trade with them on their websites, and they usually offer customer support that can assist traders with all their questions.

The foreign exchange market is a global market that is open 24 hours a day, seven days a week, for currency trading. All forex trading is over-the-counter (OTC), which means there is no physical exchange and the market is regulated by a global network of banks and other financial organisations.

Institutional traders, including those employed by banks, fund managers, and multinational organisations are the main big traders in the forex market. These traders are speculating on, or hedging against, potential exchange rate swings; they do not actually buy the currencies themselves for the sake of owning them. If a forex trader thinks the dollar will appreciate in value and s/he will be able to purchase more CFD pounds in the future, s/he might buy dollars CFDs (and sell pounds CFDs).

How to Trade Currencies

Every currency is given a three-letter code. So the US dollar has the code USD and the pound, GBP. While there are more than 170 other currencies in the world, the US dollar or greenback, as is also known by forex traders, is used in the vast majority of forex trades. The euro is the second-most popular currency on the foreign exchange market.

Other popular currencies are the Japanese yen (JPY), the British pound (GBP), the Australian dollar (AUD), the Canadian dollar (CAD), the New Zealand dollar (NZD) and the Swiss franc (CHF).

When traders trade forex, they are always buying or selling CFDs on currency in pairs. There are major currency pairs or majors, minors and exotics. The major currency pairs include the USD and are the following seven currency pairs:

Currency Pairs in Forex Trading

Each currency pair displays the two currencies’ most recent exchange rates. Using the GBP/USD, or the pound-to-dollar exchange rate, as an example, here is how you can read the pair. The currency on the left (the pound) is the base currency. The currency on the right (the US dollar) is the quote currency. By calculating the exchange rate, you can determine how much of the quote currency is required to purchase one unit of the base currency. As a result, the quotation currency varies depending on the market and how much is required to purchase 1 unit of the base currency. The base currency is always expressed as 1 unit. If the GBP/USD exchange rate is 1.08, that means £1 will buy $1.08 (or, it will cost $1.08 to buy £1).

If the exchange rate of the GBP/USD rises, then it means that one pound will buy more dollars and shows that the base currency’s value has increased relative to the quoted currency.

On the other hand, if the exchange rate falls, then the base currency’s value will fall too. In each currency pair, the base currency is shown first and the quote currency is shown second.

How to Start Online Forex Trading

Most forex trades are made with the sole purpose of taking advantage of price fluctuations by speculating on whether the value of a particular currency will go up or down.  If a trader believes a currency will go up, then they will buy it, and if they believe it will go down, they will sell it. In order to gain an understanding of how the market works and to be able to speculate with confidence about the change in currency value, it is good to read about currencies and follow an economic calendar closely. By being aware of all the market-moving news and events you will be able to anticipate, within reason, if the value of a currency will go up or down. For example, when global market sentiment is weak and traders tend to avoid risk currencies, they usually buy safe-haven dollar CFDs. During periods of political uncertainty and global economic concerns, the dollar and the Japanese yen tend to strengthen as they are both safe-haven currencies.

Forex Trading in the Spot, Futures and Forward Markets

The spot market is the main forex market where CFDs on currency pairs are exchanged in real-time, based on supply and demand. The futures market refers to the market that deals with futures contracts to buy or sell CFDs at a fixed currency amount at a specific exchange rate in the future. The forward market refers to the market that deals with forwarding contracts. Forward contracts can be used for hedging and speculation, but they can be tailored to a customer’s requirements.

Let’s Talk Forex: Some Useful Terms

If you are going to start trading forex, then you will need to learn the language, or at least start with some basic terminology.

What Influences Currency Prices?

When you are trading forex, you need to be aware of the forces of the market and what moves the prices of currencies. Currency prices are affected by the supply and demand of sellers and buyers, but also by Central Bank decisions and policy meetings, geopolitical events and macroeconomic data that demonstrate how well the economy of a country is doing.

Traders are usually attuned to market data and economic releases and always keep an eye on the financial markets, politics and big events that can create sharp increases or decreases in currencies. 

Leverage when Trading Forex

When trading forex via CFDs, traders can use leverage which can multiply your profits and losses too. Traders need to be aware of leverage and how much to use, especially when they are just beginning to trade.  With currency prices going up or down sharply, traders can execute multiple traders using leverage and target potential profits. However, since the market is unpredictable, and currencies can fall or rise, too much or too little, traders need to be careful and have a risk management plan.

Why does Trading Forex Matter?

If you’re interested in forex trading and want to give it a try, you’ll need to make sure that it’s the right market for you and that you have the time and funds to explore it. Here are some of the reasons given by traders about why trading forex is appealing to them:

It’s a large and global market with trillions of dollars being exchanged daily

Additionally, recognised and trusted brokers provide a wide range of educational content, including webinars, tailored forex articles and research for all levels of traders, and many more. If you would like to learn more, head over to IronFX’s website and check its Trading School and other resources.

#source


RELATED

Biggest Mistakes to Avoid as a Beginner Trader

One of the things learned on the trading floor is that the most crucial part of the success formula is to accept a loss. It’s how traders gain an additional profit and an edge against others...

Choosing a trading instrument: how to trade currency pairs

Early on the path to becoming a trader, every beginner must determine what to trade and how. This choice should be made based on the desired goals...

Is it Easy to Learn Forex? A Comprehensive Guide to Mastering Forex Trading

Forex trading is a popular and potentially lucrative way to earn both active and passive income. However, it's essential to understand that learning forex is an ongoing process that doesn't depend on whether...

Scalping: 3 Forex Trading Styles to Try

Just as a soldier doesn't willingly run into battle unarmed, a successful trader shouldn't enter the market without a strategy. Trading is not a game of chance - if you open...

Basic guide to Forex risk management strategies

Trading risk management is vital to becoming a successful trader and making money online. Learn the risks of poor risk management and discover how you could...

Ultimate guide to trading Bitcoin for beginners

Bitcoin is the world’s first cryptocurrency that paved the way for the multi-trillion dollar crypto market we can trade and invest in today. Read on to learn everything you need...

Trending Stocks

Big tech, pharma, banks and other trending stocks are always a hot topic in the investment markets.Millions of investors flock to stocks like Apple or Amazon...

Stock Indices: What Are They And How To Trade Them

When describing the markets, we might hear of popular phrases like “the market has surged higher” or “stocks tumbled to new lows” when reading and listening to news reports...

How to Trade During the US Presidential Election?

Unless you've been hiding under a rock for the past year, you've probably heard, read, or participated in some heated discussions about the US presidential race...

Federal Reserve System: What It Is And How It Works

The Federal Reserve System (Fed) is the most important money management organization in the United States. However, its influence is much wider, it has a strong impact on global economic growth...

Everything You Need to Know About Margin Trading

Margin trading is a popular method used by traders all over the world. It can offer attractive opportunities, but as with any form of trading there are no guarantees and the level of risk must be taken...

Introduction To The Emerging Financial Asset Class

Cryptocurrencies are digital currencies built on blockchain technology that exploded in a few years from an industry worth just millions of dollars into a booming...

What is a broker & what does it do?

The term "broker" is used in various spheres, such as in real estate, insurance, mortgage, etc. However, we mostly hear this word when talking about...

Online Forex Trading: A Beginner's Guide

The foreign exchange market, also called forex and even FX for short, is the world's most liquid and highly traded market in the world. The market solely trades...

How to Achieve Effective Diversification in Currency Trading Portfolio

In the intricate and fast-paced realm of currency trading, attaining success is not solely reliant on precise market scrutiny and sagacious decision-making but also on the meticulous construction and strategic composition of your trading portfolio...

MetaTrader 4 (MT4): A Comprehensive Guide

MetaTrader 4, an offering from MetaQuotes Software Corporation, has firmly rooted itself in the world of foreign exchange trading. It has become an iconic platform...

Most Important Forex Regulators in the World Today

It is important to regulate forex because the amount of money which passes through the market everyday makes it very attractive for all sorts of scammers...

What is a stablecoin?

Stablecoins play a significant role in the global cryptocurrency markets, providing a range of use cases for traders, investors, and active crypto users...

What is a Bear Market? A Complete Guide

Sometimes, during market cycles, the stock markets may plunge, and prices could fall. It may be for a short period of weeks or months, or even drag on for years...

First steps of a trader. Where to start your Forex journey?

Welcome to the world of trading! You probably want to become more active in managing your finance and are now in doubts where to start. This article will guide...

FP Markets information and reviews
FP Markets
81%
RoboForex information and reviews
RoboForex
77%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.