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Essential Facts About Forex Trading

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rohit ch
Essential Facts About Forex Trading

From professional to beginners, people from all around the globe are involved in forex trading. There is an enormous pool of information available about forex trading. The popularity of the forex market is ever-growing, and advanced technology has made it all more accessible to people living in different corners of the world. Today, millions of traders trade every day in the forex market. This way, the forex market provides exciting trade opportunities. Let us look at some essential facts of forex trading that make it what it is.

1. Forex trading involves a lot of risks. Due to high volatility, the market is prone to risks. Therefore, a mix of patience, dedication, and hard work is needed to pursue forex trading. Another factor apart from volatility is the high leverage offered in forex trading. The leverage can go up to 1:1500. Yes, it is indeed a huge ratio. Therefore, one needs to step with utter cautiousness in the forex market.

2.One can derive profit from the underlying profit in forex trading. In the forex trade, one can make huge profits and also be financially free. Yes, of course, it takes a lot of practice. So gear up for a lot of practice and learning as you go on with forex trading.

3. You can benefit from the high leverage in the forex market. High leverage allows small traders with little capital to borrow money and trade in the market.

4. Analysis in forex trading is a twin function of technicals and fundamentals. Fundamental factors include economics, social, and political influences on the market. Technical analysis, on the other hand, includes analysing the trends, patterns, and movements of the market.

5. There is an infinite number of indicators available that can be used in forex trading. Some famous and most used indicators are Bollinger Bands, Average True Range Indicator, Moving Averages, and Relative Strength Index. The best part is that these indicators are extremely customisable and can be used as a mix depending on the trading style of the trader or investor.

6. Profit and losses in forex trade are calculated in terms of “pips”. Pips are the point of difference between the selling price and the buying price. It can come up as positive or negative.

7. The forex market never sleeps. The market is open twenty-four hours a day for five days a week. This gives traders and investors immense flexibility and liquidity of trading.

8. Currency in the forex market is traded in pairs. The base currency is bought, and the quote currency is sold. It depends on the value of currencies to be treated as base or quote in the market.

9. Forex trading is one of the most voluminous markets. The currencies are exchanged in a colossal number of about 5.1 trillion dollars per day. This large volume attracts a lot of traders and investors in the market.

10. Different brokers offer different features. Numerous brokers in the market facilitate forex trade. All these brokers mostly have something different from each other. There are different sets of brokers and platforms for bullish and bearish forex traders.

11. The United States dollar governs and commands the foreign exchange market. Around eighty percent of the forex trade is centred around the dollar. That is a striking percentage considering about 5.1 trillion dollars are traded every day.

12. Globally, there are about ten million traders associated with forex trade. The market is still in a growth phase; a massive number of traders enter the market every day.

13. Foreign exchange transactions can be traced back to ancient times. It can be recorded back to biblical times. Currencies were exchanges, and a commission was charged on such exchanges.

14. At one point of time, only banks and financial institutions that held forty million dollars minimum as liquid funds were allowed to facilitate forex trade. But now, forex trading can be conducted by individual traders with the lowest of funds.

15. Yes, the US dominates the forex market, but still “Wall Street” does not hold the distinction of being the forex capital of the world. This falls in the hands of the London Stock Exchange. The United Kingdom handles about forty percent of the forex trade whale the United States handles only nineteen percent.

Bottom Line

These were some of the essential facts about forex trading that every trader must know before entering the market. After all, the better you know a practice, the better are the chances of you winning it over. Since the forex market is such a massive hit, there are lots of facts and myths associated with it. A trader must compile extensive research before investing a lot of capital in forex trade.

But one thing is quite promising. Forex trade will lead to a lot of fun and exciting opportunities as you grow and learn with it.

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