Forex Basics. Currency Trading Guide For Beginners
The Forex Market is the biggest financial market on the planet, with over $4 trillion traded a day. So that´s 4 with 12 zeros after it- $4,000,000,000,000, or 4 million million if you prefer. Quite a big number! It´s a figure that easily surpasses the amount of money that changes hands at the world´s biggest stock markets.
Forex traders (like you) buy one currency while selling another through brokers. Forex currencies are traded in pairs, like the Big Daddy: EUR/USD and Cable, a slang term for GBP/USD (more on that later).
What you are effectively doing, is betting on one country’s on relation to another country (this is what makes it so interesting!). If you think the US economy is strengthening against the UK economy, for example, you might buy US dollars and sell GB pounds. Of course, not much in life moves in smooth straight lines- there are lots of spikes and dips in the relationship between 2 currencies, and the trend can be different depending on what time frame you are looking at. There are plenty of forex currency pairs to choose from. Start by concentrating on one or two- preferably a major like EURUSD or GBPUSD.
The other interesting thing about the Forex (or Forex Spot) market, is that it is open 24 hours. That is because there is no central clearing house, but rather a network of banks that are trading among each other. So the forex market is rather like the old British Empire. The sun never sets on it.
The other big change that has happened to the forex market is the internet. Whereas previously, only the big hitters in The City, New York, Hong Kong and Sydney could get in to trading currencies, now the market is open to individual traders or “retail traders” like you or me.
As long as you have a pc, laptop, or even a phone, a broker account and an Internet connection (preferably high speed)- you are good to go.