In simple words, Forex trading is the simple practice of exchanging one currency for another.
If you have ever been on a trip abroad and had to swap your Dollars (USD) for Euro (EUR) Or exchange your British Pounds (GBP) for Australian Dollars (AUD).
Then You’ve already had your first experience as a Forex trader, although likely, you didn’t make any money in this trade.
Who trades Forex?
There are 3 types of organisational trader trade in this market.
1. central banks
2. corporate houses
3. Retail traders or investors.
Central banks :
Central banks must try to regulate and control the price fluctuations of their currency. The central bank’s decision-making, such as its interest rate policies,
can bring huge price swings and fluctuations in the market.
Their main aim is to stabilize inflation and stimulate their economy via the Forex markets and their currency's market value.
Corporate houses:
Corporations are also heavily involved in Forex markets. When they conduct business on a global scale, companies will typically import and export with countries using different currencies than their own.
Retail traders:
After the central bank and corporate houses, the remains are called retail traders. Retail traders are like you and me and every individual trader.
Why trade forex?
forex is the largest market in the world, and there is almost always liquidity on a wide range of currency pairs, giving traders almost limitless opportunities to profit.
forex is so popular because it runs 24 hours a day, 5 days a week. it's one of the most openly available markets in the world.
it allows the trader to trade full-time or part-time jobs. whenever in the stock exchange the working hours would likely overlap.
combining all these factors gives people the opportunity to make money from wherever they are in the world.
How to trade forex?
In simple language, when you trade forex, you are buying one currency and selling another currency. In forex trading, you are doing both buying and selling simultaneously. when you buy one you are immediately selling another.
for this reason, currencies are always quoted in pairs.
the top 5 currency pairs based on their trading volume.
[EUR/USD],[USD/JPY],[GBP/USD],[USD/CHF],[AUD/USD]
When can you trade forex?
The major trading centres for forex around the earth are London, New York, Tokyo, and Sydney. The diversity of these geographical locations is what makes forex a 24-hour market. Each of the four regions has its official hours. It is important to be aware of these as they can affect the volume traded and the volatility of the currency associated with that nation’s currency. Let’s take a look at these four trading centres and their opening times. All times are in GMT (Greenwich Mean Time).
London – 08:00 – 17:00
New York – 13:00 – 22:00
Sydney – 22:00 – 07:00
Tokyo – 00:00 – 09:00
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