What is forex trading?

  So, What is Forex trading? It is sometimes called FX trading. Forex trading is the buying and selling of  countries currencies or money. 

If you are new to Forex trading, we will direct you and take you through the simple steps on how to trade Forex. 

When you buy a country’s currency, it is like investing into that country’s stock.  In order to do that, you first change your local currency to that particular country’s currency you intend to buy.

Forex trading in our daily activities.

If it’s your first time to trade Forex or you have no idea about Forex trading, you at least know of exchange rates. 

 You have seen or heard of exchange rates in exchange bureaus and banks, on radios, Tvs, or read it in newspapers around your cities.

Bureaus and banks always display these different exchange rates for different currencies on their boards for their clients.

On the other hand, if you have ever traveled abroad, it’s absolute that you participated in Forex trading. let me show you how!

If you want to keep your pounds in  US dollars, you go to the bank or an exchange bureau and buy a dollar on the exchange rate current on the market.

Again, if you have dollars and you need pounds, you do the same; sell dollars as you buy pounds at the given exchange rate.

This happens every time you want to visit a foreign country.  You change your local currency into that of the country you intend to visit. Doing this,  you buy the currency of the country you intend to visit and sell your country’s local currency. 

On your coming back you sell the foreign currency and buy back  your own local currency. When you do that, you participate in the Forex market. This is because you exchange one currency for another, hence Forex trading.

Forex simply means currency trading. You sell one currency as you buy the other(trade money).

The Forex Market

Like any other market or trade, Forex trading involves both the buyer and the seller. This means it is also affected by forces of demand and supply.

 The only difference is that, while in the daily market, there is always the physical exchange of goods or services. This is not the case when it comes to Forex trading.

With Forex trading, you trade through a broker on the over the counter market. There is no direct contact between the seller and the buyer.  

You trade money/currency as your product not goods or services. Just money from different countries across the global world.

The Forex market is the largest financial market in the world with about $5.3 trillion volume in trade a day. The Forex market is open 24 hours a day, five days a week except on public holidays.

To your convenience, you can trade day and night. There is no limit on the time to trade.

So, How Do You Trade Forex!

Forex trading is simple to trade though very challenging to profit from. You are free to trade any currencies as long as it is listed on the Forex market. 

 Currencies are traded in  pairs against each other.  Therefore, to trade, you have to buy one currency as you sell the other.

You buy a currency when its price value is appreciating and sell it when its price value is fluctuating.

Note:

With different dynamic factors affecting Countries’ economies, currency prices will fluctuate and appreciate depending on these factors. They include, social, economical, political and environmental factors.

All you have to do is to predict right and make a profit.  The profit is attached on the currencies’ interest rate differentials.

So how to trade in forex market is that simple;

For instance, if you choose to buy let’s say US dollar, you are predicting that the US economy is doing well and will continue to strengthen. So you buy the US dollar comparing it with the paired currency.

On the other hand, if you predict that the US economy is doing bad or is collapsing, you sell the US dollar in relation to the paired currency.

You shall learn more on how to trade forex in details as you continue to the next lessons. 

You are welcome.