Forex Education

The foreign exchange or Forex market is probably one of the biggest financial markets available to traders, which is currently an over the counter, decentralized Global market. Currently, an estimated figure of about 1 trillion USD is the valuation of the Forex market. Experienced traders certainly know the ins and outs of the forex, but that does not pan out that way for every investor. The novice traders are generally worst hit, since a lack of information, coupled with bad decisions can cause them to lose fortunes.

In countries like South Africa, trading Forex is a very popular practice as there are many online brokerage platforms available that are regulated by the FSB (Financial Services Board) and offers assistance for this type of trading. Therefore, if you are a citizen of this country and want to get yourself involved in this kind of trading, you would need to have extensive knowledge about multifarious aspects foreign exchange trading.

The Forex/CFDs market is the ‘largest’ financial market and trades near about $1.5 trillion per day. The traders can play the forex market 24 hours a day, five days a week. This is possible due to the fact that forex trading is not limited to one location and depends on the various markets around the world. So if a person wants to trade forex beyond the market hours of the region s/he is located at, then s/he has to choose the market of another region whose trading hours are still open.

A large part of the financial market constitutes FOREX or Foreign Exchange that is basically an over-the-counter market used to trade the numerous currencies of the world. The Forex market continues to have the highest trading volume. The Forex market can be distinguished into three major regions—Europe, Australasia and North America. These, in turn, contain several major financial hubs. This market completely revolves around the currency pairs.

Being considered as the most liquid market in the world, the trade volume for a day can be as high as $2000 billion USD. The traders can trade forex during any of the 4 Forex trading sessions from any region as all the transactions now occur online. As currency pair is a critical aspect of the Forex market, a pip denotes the measure of change in the price of the quoted currency.

Foreign Exchange Trading, also known as Forex trading is one of the most heavily traded markets in modern times, where traders hope to earn a profit through speculation of different currency values. Currencies are generally paired up and are called Trading pairs which indicate the value of one unit of currency with another. For example: USD/EUR – The U.S. Dollar against the Euro.

Margin is basically the difference between the production cost of a product/service and its selling price. It also denotes the ratio of a company’s proceeds and expenses. In Forex trading, ‘margin’ is the deposit made by the trader to maintain open positions. It is neither a fee nor a transaction cost rather margin amount is set aside from the main account of the trader.

Millions of traders and investors participate in the Forex trading market daily. Day by day the number of Forex broker websites even as they compete with each other to provide tighter spreads and advertise that with them the traders will make most profits. Compared to the stock market and other such markets, the Forex market offers greater leverage and is more volatile thus, making it riskier and more interesting for the investors and traders to play the market.

Trading forex is not as easy as some brokers advertise. The trader will need all the help from the technical tools, charts, graphs and even from the financial and political news. Trading on any market depends on analysis. There are basically two types of analysis that are prevalent among the Forex traders—technical analysis and fundamental analysis. Another type of analysis used when trading currency pairs is sentiment.

The trading charts are the ‘primary’ way of studying the market conditions. And, analysis of the market properly will lead the trader towards devising a sound strategy that will in turn increase the profits of the trader. Candlestick chart is the most popular type of Forex trading charts and was first used by the rice traders of Tokyo in the 1700s. Besides this, line charts and bar charts are also widely used by the traders.

Time frames in trading Forex basically denote the time period that is represented by the real body of the candle. The gap between the opening price and closing price of an asset as represented by the real body of the candle denotes the time frame. Traders interested in the currency pairs choose to study charts of different time frames or may study a single time frame chart.