It’s hard to know where to start when it comes to the Forex industry. $5.3 trillion are traded every day on the Forex market, making it the largest financial market in the world.
It’s an industry that is constantly changing (influenced by geopolitical events & supply and demand) and filled with complex terminology.
FXTM, have put together a detailed ‘Beginner’s Guide to Forex Trading’ to help you get to grips with terminology, currency pairs, trading platforms and more.
What is Forex Trading?
In its simplest form, Foreign Exchange Trading is when you buy a currency at one price and sell it at a higher price on the Forex market.
Although the US dollar is the most-traded currency on the Forex market, the UK is the largest centre for Forex trading where 41% of all Forex transactions happen.
Understanding the Forex Market
In the Forex market, there is a place for everyone at the table. Unlike the stock market, you don’t need to shell out thousands of pounds to get started. Some brokers even let you open an account with as little as $100.
Benefits of trading on the Forex market include:
- The market operates 24 hours a day, 5 days a week, so your schedule isn’t dictated by market opening hours
- The Forex market has superior liquidity as there is an ongoing supply and demand for money
- It has a high level of transparency and traders have more power over their trade transactions
- Low transaction costs, typically lower than 0.1% (within normal market conditions)
Currencies are also separated into pairs, so that you can see the exchange rate between the two currencies more easily.
Some of the most famous Forex Trades in history
In the past, some traders have simply followed their gut, or used their cunning intellect to find the right moment to trade big.
George Soros broke the Bank of England by betting against the pound in 1992 and netted. His decision to change his position from $1.5 billion to $10 billion enabled him to pocket a profit of $1 billion.
Andrew Krieger noticed that the New Zealand dollar was particularly overvalued and acquired a short position bigger than the money supply in New Zealand. Krieger’s decision netted $300 million in profits for his employer and $3 million for himself.
What does it take to be a Forex trader?
Interested in becoming a trader? There are several qualities vital for succeeding:
- You need to be able to see the big picture
- Have confidence in your own decisions
- Being able to adapt to changing market environments and trends
- Patience – make sure you have performed plenty of research before jumping into a trade opportunity
Want to become a trader today? Click here to take a look at FXTM’s ‘Beginner’s Guide to Forex Trading’.