Did you ever go abroad and exchange money at the airport? Good on you. You’ve already been exposed to the forex market. But forex trading is larger than currency exchange counters and foreign holiday budgets. It’s the world’s largest and most liquid financial marketplace, and it’s available to anyone with a computer and internet connection. In this entry-level guidebook, we’re going to breakdown what forex trading is, how to perform it, and how to get started—without drowning in technical jargon.
What is Forex?
Forex is short for Foreign Exchange and simply means the selling and purchasing of currencies. The forex market is where these are done and is open 24 hours a day, five days a week, worldwide.
Forex is purchased and sold in pairs—e.g., EUR/USD (Euro/US Dollar) or USD/JPY (US Dollar/Japanese Yen). Selling forex is essentially selling one currency and purchasing another.
Example:
You believe the Euro will strengthen against the US Dollar, so you purchase EUR/USD. You were right and the Euro strengthens, so you sell it back and pocket the difference.
Why Forex Trading is So Popular
There are many reasons why millions of individuals worldwide are attracted to forex trading:
- Low entry barrier – You don’t need a lot of money to start.
- Leverage – Brokers enable you to have control over larger positions with a minimal deposit.
- High liquidity – You can quickly buy and sell.
- Exposure to the world – You can trade currencies sensitive to global events.
How Forex Trading Works
Forex trading is pure speculation. You attempt to forecast if a currency is likely to increase or decrease and place a wager on it. One easy definition is this:
- Choose a currency pair to trade (e.g., GBP/USD).
- Market research employing trends, news, or charts.
- Buy or sell based on your analysis.
- Close out your position to realize profits or limit losses.
Forex trading takes place on platforms provided by online brokers. Platforms bring you into contact with foreign currency markets and include tools, charts, and features to enable you to trade smarter.
How to Begin with Forex Trading
You can start forex trading easier than you think. Here is what you need to do:
- Select a well-known broker
- Open a trading account
- Practice on a demo account to feel confident
- Grasp the basics of technical and fundamental analysis
- Start with a small quantity
A Note on Choosing the Right Broker
Selecting the proper broker is key to your success and security in the forex market. You’d prefer a regulated, newbie broker with quick execution and supportive resources.
One of those platforms that most new traders start on is Exness. It is simple to use, has low spreads, and open prices. And you can open a demo or real trading account within a few minutes.
Tip: If you’re interested in improving your skills without spending a penny and don’t have to employ real money, Exness has a free demo account as well so it’s an excellent option for beginners.
Forex trading is rewarding and exciting, but risky, as is any type of investing. That is why you must start slowly, learn, and use good tools. Wherever you want to have a second source of income or venture into the field of foreign finance, the forex market provides endless opportunities. Just remember this: knowledge, patience, and the right platform are the things that count.