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what is forex trading and how does it work?
If you want to learn how to trade with different financial assets, it is important to know some basic aspects that allow you to create a successful system to invest!
The Foreign Exchange market, also known as Forex is a global and decentralized market where currencies are traded. Each of these currencies has a conversion rate, called the exchange rate. For example, if the EUR / USD has an exchange rate of 1.10, it means that 1 euro equals 1.10 US dollars.
Forex is one of the most liquid markets, where the daily volume of transactions is 5 trillion dollars a day.
It is mainly used to facilitate operations and investments between countries.
The Forex market is open 24 hours a day except the weekend, opening in Sydney on Monday mornings and closing in New York on Friday afternoons.
What is Forex trading?
The term Trading is the activity through which one product is exchanged for another. You can trade with a multitude of instruments: forex, commodities, indices, stocks, cryptocurrencies, etc.
The term Forex refers to the market in which some currencies are exchanged for others, as well as other types of financial instruments.
Therefore, what is forex trading? Forex trading is an activity, or even a profession, through which currency pairs are bought and sold to speculate on the rise or fall in the price of these pairs.
This activity is open to anyone who has a computer and internet access. Forex trading is a type of daily and international trading. States, companies, even individuals, like you, operate in currency every day.
This Trading is done through computer networks between traders around the world. This is the main reason that the Forex market or currency market is the largest and most liquid market in the world, the most accessible and as a result also the one considered most dangerous.
Best currencies to trade in Forex
Let’s look at the most popular currencies that are available for traders:
The U.S. dollar
The Pound Sterling
The Japanese Yen
the Swiss Franc
Which make up the group of major Forex currency pairs:
EUR / USD
GBP / USD
USD / JPY
USD / CHF
See how the US dollar is included in all pairs.
Compound pairs of major currencies that do not include the US dollar are called cross pairs.
Some examples are:
EUR / GBP
GBP / JPY
CHF / GBP
3 other currencies can be commonly found when trading in Forex:
The New Zealand Dollar
The Canadian Dollar
The Australian Dollar
If you join them with the US dollar, you will have a group known as minor pairs:
NZD / USD
CAD / USD
AUD / USD
All other pairs, generally known as exotic, make up less than 10% of all Forex transactions.
Investing in the Forex market without knowledge puts your capital at risk and you can lose it … invest money you can lose only.
On the other hand, if you educate yourself correctly you can earn a lot of money!
#forextrading #currenciesexchange #operateinthemarket