What is Forex?
Forex (foreign exchange market), in simple terms, is an exchange of one foreign currency for another. Trading on the difference in exchange rates, you can profit from a dozen dollars to thousands or even millions. Forex is always about “currency pairs”, so the trading process always comes in pairs, like EUR/USD, USD/JPY, GBP/USD, etc. Everyone can become a trader, all you need is to open an account and have a willingness to start.
What are the types of Forex accounts?
Choosing the Forex account type for beginners
There are different types of Forex accounts and you can choose any of them. However, the most important thing for a newcomer is to start with demo accounts. Trading on these accounts is performed on virtual money so you can test your strategies and skills absolutely free. You can also start with Cent accounts where you trade using real money, but with 100 times lower amounts than on standard ones. The deposit sum is displayed in cents and looks much more solid.
Brokers also offer other types of accounts: standard, mini, ecn, etc. The difference may be in the recommended initial deposit, offered spreads, maximum available leverage, com
mission, other conditions. It is better to start trading on one such account when you are already an experienced trader and ready to trade on your own funds.
What are the things to consider
when trading on Forex?
- Everyday market overview. You need to monitor the Forex market every day, as key events directly affect the prices of the currency pairs.
- Technical analysis. Analyzing changes in prices in the past, you can predict the future changes and make a good deal in time.
What are currency pairs
Forex trading always involves selling one currency in order to buy another. For this reason, they are quoted in pairs that show which currency is being bought and which is being sold. Each currency in the pair is listed in the form of its three letter code, which tends to be formed of two letters that stand for the region, and one standing for the currency itself.
GBP/USD, for instance, is a currency pair that involves the Great British pound and the US dollar. In this pair, you are buying pound sterling by selling US dollars.