Forex for beginners: An introduction to the forex market

Julie Brownlee, Fsp Invest, 25 Mar. 2015

Tags: forex market, what is the forex market, trading the forex market, forex trading, trading currencies, trading forex,

The forex market is also known as the currency market or the FX market.

It’s where the world’s currencies are traded. And this makes it the most liquid and most traded financial market in the world.

So how does it all work? And how does it give you an opportunity to profit?

Read on to find out…

What you need to know about the forex market

The high liquidity of the forex market means it’s extremely easy to buy and sell currencies. The forex market sees a daily turnover of around $3 billion a day.

The forex market isn’t a physical market place like a stock market. It all works through a network of computers.

And what makes it very accessible to traders is that it’s open five days a week, 24-hours a day.

On a Monday morning, as the markets open in the east, forex trading kicks off for the week. Then it works its way round the globe as different market open. The last market to close is the US market on a Friday evening.

How you can profit from the forex market

Currencies trade in pairs, such as the dollar/euro, yen/pound or rand/dollar.

When you trade currencies, you’re looking for one of the currencies in the pair to rise in value against the other one.

You can start trading currencies with a trading account from R500. And with the gearing element that comes from trading on margin, you can make decent profits in a short space of time.

Many forex traders use technical analysis to spot trades and they have a strong tendency to stick to trends and repeat historical moves.

You can trade forex according to your trading personality. You can trade over the very short-term, perhaps only being in a trade for a few hours, to more long-term moves over a month or two.

It’s entirely up to you and the strategy that you follow.

But trading forex isn’t for everyone. There are risks involved as it’s geared trading. It’s vital you understand what you’re doing before you risk any money.

So there you have it, an introduction to the forex market.

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