Getting Yourself Familiarized with Forex Market
The first thing we have to know is what is Forex?
Well, Forex is a market place that helps to exchange currencies. Forex stands for Foreign exchange. People change their currency into another currency for many reasons, like for trading, tourism or for many other reasons. But when they start trading currencies to make a profit, it becomes a Forex trading business. Many traders are leading a high standard of life just with this business.
However, there are many other financial markets in the world like the Tokyo Stock Exchange, London Stock Exchange, and the New York Stock Exchange. New York Stock Exchange is known as the largest stock market but in reality, if we compare the NYSE with the Forex market than NYSE will be a puny stock exchange. So, instead of trading stock, you should become a Forex trader, since the profit factors are insane at trading.
What do people trade in Forex?
The answer is MONEY. For beginner, Forex trading can be confusing as in Forex people don’t purchase anything physically. When you hear that people buy anything from trade that means they buy SHARE. And later they sell those shares to get some profit. Usually, elite brokers like Rakuten offer trading service to the retail traders.
The retail traders can trade currency pairs via online trading platform and start making a profit. Most importantly, you will get access to a leverage trading account and this will help you to open big volume trades even with small capital.
Trade has its lingo
Every business has its own short words. Like that trade has its lingo to express many things. For instance, in trading, we can refer to the long term investors as “position traders”. You also face many new terms when you start trading as a full-time trader. For example, when a trader buys share they refer the word long instead of buy, here long means buy position. And when they sell any share they refer the word short instead of sell orders. Don’t get frustrated, just use the Forex trading demo account for the first few months and you will learn many new things.
Best time to sell or buy currencies
The real business in trading happens when the time of the two major trading sessions overlap. Most of the active traders start trading when London and New York sessions overlap, this is the busiest time for a trader but that doesn’t mean you can’t trade at different times of the day. You can work on any time on Forex trade but you need to keep a look at the price-chart consistently to get profit.
The best day for trading
Like the timing, we need to also focus on the day. Trade doesn’t remain busy for the whole week; there are specific days when a trader can get more profit. The best days are the middle of the week because most action occurs on those days. Or you can learn about the high impact news to find the best trading hours in the week.
Forex market remains open for 24 hours daily but that doesn’t mean action occurs all day long. A trader should know when is the perfect time for trading to get more profit. It’s not a good idea to trade on the weekend because maximum people remain busy by enjoying their weekend with family or friends.
In this writing, we tried to give a brief idea about the aspects of Forex trading. Forex trading can be an easy business if you maintain the above aspects properly. It is important to pay attention when you should buy or sell currency in a trade.
If you are new in the Forex trading than learn about the tools that are available in Forex, like the pip calculators, price-chart, profit calculators and currency exchange converters. And to become a successful trader you have to be always active in the Forex market.
This article has been written by Chandra Mehta.
Chandra is a seasoned banker with 35+ years of experience in banking and financial services industry. He’s a retired banker and has served as Chief Manager and Assistant Vice President in State Bank of India/or its subsidiaries. He has authored many articles on this site (allonmoney.com).