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Forex market currency trading

Forex market currency trading

In this educational article, we will highlight one of the terms that we hear about a lot, especially on the Internet, which is the term forex market or the global currency market.

The most important points that we will talk about to learn about the currency market
 
What is the forex or the foreign exchange and foreign exchange market?

FOREX is an abbreviation of the term Foreign Exchange Market, which means the foreign exchange market and is also symbolized by the abbreviation FX, and forex is one of the most famous financial markets and it is a huge financial market in which the currencies of countries are traded between millions of investors, banks and investment funds for several purposes, the most important of which is to benefit from changing exchange rates Currencies and make profit by buying and selling operations. 

Forex trading has flourished due to technological development and the spread of the Internet and modern means of communication, and the forex market is a decentralized market and has no geographical boundaries where it is traded using the OTC system or trading outside the platform.

 
How did the forex market start? The genesis of money

Forex started based on the principle of barter, where people in the past practiced the process of trading by bartering goods with each other because there was no money or banknotes at that time. The barter system was the basic building block on which the currency trading system depended. Trade such as snails, precious stones and others in trade operations, so that the value of the commodity is determined by a certain number of these media, such as buying meat for four snails.

Soon these media were replaced by pieces of gold, silver and precious metals, and then people tended to use paper currencies as an alternative to gold and silver, so that banknotes would be printed expressing a certain amount of gold, and this was the beginning of the emergence of money that we know today.

 
How much is the trading volume in the forex market?

The forex market is the largest financial market in the world in terms of liquidity and trading volume, reaching $6.6 trillion per day in April 2019, equivalent to 25 trillion Saudi riyals per day. Forex cannot be compared to any other financial market in terms of liquidity, for example: the New York Stock Exchange NYSE, which is the largest stock market in the world, has a daily turnover of only $70 billion.


 
Who trades the forex? What is the reason for its huge liquidity?

This huge liquidity in the currency market is due to the presence of different categories of traders such as major investment banks, central banks, investment funds, investment management companies, brokerage companies, individual traders and traders for non-financial purposes such as hedging purposes, in addition to the development of means of communication and online trading, And the use of financial facilities or leverage to trade in forex, this is what attracts more and more investors to the currency market day by day.

In this short video, we review a simple introduction to the forex market before completing the article
 
Advantages and disadvantages of forex trading, and is forex trading right for you?
The most important features of the currency market
Huge liquidity and high trading volume in forex
Forex trading is open 24 hours 5 days a week
Forex trading is done in a decentralized manner - OTC
Easy to follow the forex market and limit currency news
The possibility of making profit during the rise or fall of currencies
The possibility of trading with small amounts thanks to the financial leverage
Ease of opening a real account in forex
 

Disadvantages of the currency market
The degree of volatility and price activity
high risk
Weak supervisory or regulatory side
 
When can forex be traded? Forex market working hours and trading hours
The forex market is a decentralized market that operates through various means of communication around the world without a specific geographical headquarters as a center for trading. . The forex market trades in four main periods: the American, European, Asian and Australian trading period, so trading does not stop throughout the day as these periods overlap each other and continue to the next day. 

The current trading period can be identified by entering the forex market working hours and trading hours page , and the following video explains the forex trading periods more clearly:
 
What currencies are there in the forex market? What is the meaning of currency pairs?
What currencies are traded in forex? As we explained earlier, forex is the foreign exchange market, so traders trade on the currencies of countries and the most famous of these currencies are the currencies of major countries, which have economic weight, and often attention is paid to 8 currencies as they are considered the most important and highest traded among the currencies of the world, namely:

The US dollar is the currency of the United States of America.

EUR - the currency of the European Union countries.

GBP - the currency of Britain.

JPY - The currency of Japan.

Australian dollar AUD - the currency of Australia.

New Zealand dollar NZD - the currency of New Zealand.

Canadian dollar CAD - the currency of Canada.

Swiss Franc CHF - the currency of Switzerland.

Pairs Trading in the Forex Market
Trading in the forex market takes place in the pairs system where all two currencies are combined together in one pair to trade one currency against the other. It means selling one currency in exchange for buying another at the same time, meaning that the currency pair contains two currencies, a base currency and a counter currency, for each pair of Currency pairs An exchange rate, expressing what is required to be paid in the base currency to obtain one unit of the counter currency. for example:



To get one euro, you need to pay 1.17189 US dollars, that is, one euro is equal to one dollar and 17 cents.

The following video explains and simplifies the understanding of the pairs system in the forex market:

We note in the picture the presence of the selling price and the purchase price, which is completely similar to what appears in the stock market in terms of the presence of the ask price and the offer price, as the purchase price represents the price at which the purchase will be executed, while the selling price is the price at which the sale will be executed, and as You see, there is a small difference between selling the buying price and the selling price, and this is what we call the spread or the price difference.

 
What are the forex basics you need to know before you start trading forex?
There are basics that you should know their meaning before trading forex, which are:

Forex traded currency pairs
Spread, spread or difference in buying and selling price
What is a pip or pip and how do you calculate profits and losses in forex?
The method of buying and selling, the size of the deal and the contract in Forex
What is leverage and margin in forex?
What is a Margin Call or Stop Out?
 
How do you get started in currency trading?
The currency trading market is a huge market available to everyone, and you can easily start trading currencies by opening an investment account with a forex company or brokerage company. Brokerage companies provide facilities for individuals or the so-called leverage or margin trading, which enables them to trade in large amounts compared to the deposited capital. In order for an individual to trade in forex he must:

First: Learn the basics of forex trading and the most important forex terms.

Second: Learn how to use the forex trading platform

Third: Learn to analyze forex and currency price movements.

Fourth: learn capital management in forex.

Fifth: Make a plan to trade forex.

Sixth: Trade with a demo account before risking real money.

Seventh: Choosing the best forex broker and opening a real account.
 
This question always comes to mind!

Is currency trading profitable? And what are the risks of currency trading?
Currency trading is characterized by its flexibility compared to trading stocks in terms of risk management. A trader in the currency market can achieve very high returns whenever he decides to increase the risk more, as currency trading is often done using leverage and the margin system, which doubles the amount of money traded compared to its real value, and this causes the risk of investing in the currency market. So you should make sure to learn currency trading well before you start and only trade with redundant funds.

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