A short introduction to forex

Forex is the largest and most liquid market in the world. Many consider forex trading as the best work that can be done from home. Although ordinary people have had the opportunity to participate in forex trading with the aim of making a profit (and so do big banks and corporations) since 1998, forex is now the talk of forums and trading events as well as other social gatherings.

Although forex was until recently like a closely guarded secret, with the passage of days more investors have switched to electronic forex trading to achieve income and profits due to its many benefits and advantages over other trading tools such as stocks, bonds and commodities.

Nevertheless, as soon as something new appears on the horizon or becomes part of social conversations, news, articles and even gossip, misconceptions must be overcome and the mind must be kept open and this chain of concepts must be clear so that the trader can start active relying on what He has correct information.

So in this article we will try to give you some honest, but not detailed, information. What exactly is the term “forex”? Why did he become present among us? .

As one successful trader said, forex trading is like picking up money from the ground. Not trading forex means leaving this money on the ground until someone else picks it up. Others in this industry also said that forex trading is like having an ATM in your computer.

Here is an explanation of what Forex means and how a handful of traders can make profits from it:

The foreign exchange market also referred to as the (Forex) is the spot market (cash) for currencies.

But the forex market should not be confused with futures trading, in which you buy a contract to buy a particular currency in the future at a price.

What forex traders do is less risky than trading currencies in the futures market as well, it is more profitable and easier than trading stocks.

Then you might be wondering where this market is. Or rather, how to access the forex market?

The answer is that: the forex market does not obligate anyone to keep or enter one of the trading halls, as it does not have a central place for exchange, as is the case with the stock and futures markets. The forex market is considered a kind of trading on the table or what is known as (OTC) or the common market, due to the fact that the full operation of the market is done automatically through a network of banks operating continuously 24 hours a day.

It is true that if it is the first time that you hear about a market that is operated completely electronically, then this may spark some kind of curiosity for you.

We will mention here exactly what you are actually trading when you participate in the foreign exchange market (forex):

Basically, just as the major banks that use the forex market to protect themselves from the fluctuations of different exchange rates do, you as an investor trade forex by exchanging countries' currencies similarly against other currencies. Therefore, in fact, they are trading electronically what is called the currency pair or the displayed price, which represents the exchange rate between the two currencies.

Or in other words, the displayed price means how much one currency is equal to one unit of the other currency.

Example:

The EUR/USD pair was last traded at 1.2850 — this means that one euro is equal to 1.2850 US dollars. The first currency (in this example the euro) refers to the base currency, while the second currency (the US dollar) is the quote currency.

The forex market is traded on a daily basis worth 1.5 trillion US dollars, which is more than thirty times the volume of trading in all US stock markets. In simple terms, this means that about 1,498,574 skilled traders can hold 1 million US dollars outside the forex market on a daily basis and the forex market will still have more money left over than the NYSE has every day!

Forex trading is playing a vital role in the global economy, which means that there will always be an urgent need for the presence of the forex market. International trade is increasing as much as technology and communications are increasing. As long as there is international trade there will also be the forex market. The forex market must exist so that a country like Japan can sell its products in the United States of America and then be able to exchange the US dollars it gets into its local currency in Japanese yen.

There is a lot of money that can be made through the forex market and by a large number of traders, if only they can use the right trading techniques/tactics which allow them to profit without limits. Given that only 5% of the daily trading volume comes from banks, governments, and large companies that are primarily willing to hedge, the remaining 95% are trading for speculation and profit.