Forex trading for beginners can be a little difficult to grasp. If you want to dive into that world and start your journey towards becoming the Forex version of the Wolf of Wall Street, brace yourself as this is probably one of the most interesting things you’ll be reading about today.
It’s quite astonishing how few people know what Forex is even though it’s quite a big deal. When it comes to other financial markets, this one easily takes the lead as a whopping $5 trillion traded on a daily basis! That’s huge! Yet not a lot of people have even heard the term at all.
In this forex trading for beginners guide, we will go through the basics of Forex, from the definition to the different elements and features, so grab a cup of coffee and get ready to pass from a total noob to a trading expert.
What is Forex Trading?
To keep it short and sweet, Forex simply means ‘foreign exchange.’ This refers to when one currency is changed to another, which is called a Forex transaction. Many parties participate in these transactions, including travelers, businesses, banks, retail traders, etc.
A traveler from the US, goes on a holiday to France. He has to exchange some of his dollars to euro, to be able to cover the expenses in France.
Take an internationally operated business like Uber. Indians pay Rupees to the Uber driver. Italians pay Euros the Uber driver. Uber manages their business from United States and collects the profits in US dollars.
All the aforementioned examples are considered foreign exchange transactions. With that said, it should come as no surprise, seeing how big the Forex daily turnover is.
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However, when it comes to the volume traded on a daily basis through Forex, nothing is set in stone; it’s mostly based on speculation. Keep that in mind when you’re trading on the Forex market.
Well, let’s kick this off with what makes Forex trading such a great choice:
Basically, you can trade 24 hours, 5 days a week. You can also make a profit in any market be it falling or rising which eliminates a lot of the risk generally involved in trading. Trading is also leveraged, which is something we’ll cover in this guide as well.
Having said all that, what does all this mean? How does this affect you?
Well, if you’re short on time and can’t dedicate much of it to trading, Forex is the perfect market for you. Other markets are usually very time-consuming and require both big time and money investment, whereas Forex is tradable all day long for most of the week, so you can always fit some trading into your schedule even if it’s busier than the average Joe’s schedule.
We also mentioned that trading is leveraged, this means that you can increase your profits by controlling a huge amount of money per trade. BUT, you’ll risk losing a lot of money as well. Life’s all about risk-taking after all, and the bigger the risk, the higher the reward. With that said, you should experiment, practice, and learn the ins and outs of Forex trading before playing with real money. Luckily for all of us, there are plenty of ways to help with this process, namely the trading and money management plan.
