What is Forex/ Forex trading?
The foreign exchange market or foreign exchange trading, which is Forex or FX for short, is the world’s largest financial market with more than three trillion Dollars traded daily. Many people from all over the world make great investments in Forex trading and earn money. Forex Trading is much similar to stock trading, yet in this case instead of stocks, people trade with currency values. Generally, the Forex market is based on the trade of world’s currencies.
Forex is an inter-banking market, where transactions are conducted between a seller and a buyer around the clock, except for the weekends. So it’s not dependent on a particular country or a particular bank. There doesn’t exist any Forex trading headquarter, as it is not owned by anyone. This is why it’s the most flexible trading option for people around the globe.
Despite the fact that the Forex market is the youngest one compared to other financial institutions and it exists only since the early ‘70s (XX century), it is the largest in volumes and the fastest-growing market in the world. The daily trading turnover on Forex is counted to 4 trillion USD, which exceeds the overall volume of all stock markets in the USA by 30 times.
How does Forex trading work?
Forex trading is conducted in a currency pair and the trader sells one currency in exchange of another. Some of the most popular currency pairs are EUR/USD, USD/JPY, GBP/CHF, EUR/JPY and CAD/USD. When you start your Forex trading, you go “long” with one currency and “short” with the other one.
When is the Forex market open?
Unlike stock trading, which opens exactly at 9 am and closes at 4:30 pm, the Forex market works 24 hours a day from Monday to Friday, with the exception of the weekends. The Forex day starts in Sydney and moves around the world to Tokyo first, then to London and New York.
Is Forex trading risky?
Forex trading is actually considered to be rather risky, only here you can reduce the risk with the help of various tools and techniques, such as market analysis (either technical or fundamental), signal providers, Forex robots and trading systems. However, the best way of reducing the high risks in Forex is to thoroughly study the market before trading real money. For this, you can use a demo account for some time, until you are completely educated about the Forex market.
How long are Forex positions maintained?
Actually, Forex positions are maintained for as long as the trader wishes. However, according to the statistics over 80% of Forex trades last for seven days and less and over 40% for two days or even less. All in all, the trader closes the positions as soon as he has achieved his profit goals for that specific trade. The Stop Loss is triggered, when the trader has lost the maximum amount of money he was ready to, or when he has noticed a new position that he wants to make an investment in.
How often are Forex trades made?
Most traders open multiple positions throughout the day, as the Forex market is open around the clock and they don’t have to pay any commissions to most brokers for opening and closing a new position. The recent statistics show that the average Forex trader opens about 10-20 new positions every day. There are traders, who open and close positions 40-50 times or even more daily.