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How to Start Forex Trading?
How to Start Forex Trading? — one of the most searched phrases on Google. Forex trading, also known as foreign currencies and commodities exchange trading, involves buying and selling currencies and commodities on the global market to earn profits. It is the world’s largest and most liquid financial market, with an average daily trading volume exceeding $6 trillion.
Forex trading allows traders to participate in the largest financial market and potentially generate income through swing, active, scalping, and positional trading. The best way to learn forex is by joining our community through our Free WhatsApp Groups.
Forex Trading Overview
The forex market operates 24 hours a day (technically 22 hours), 5 days a week, and is the most liquid financial market globally. It runs on a decentralized network involving banks, financial institutions, corporations, governments, and retail/HNI traders.
The forex market begins its trading day in Sydney, Australia, and ends with the closing bell of the US Stock Exchange. Its primary purpose is to facilitate currency conversion and global trade. To join our Forex Trading Course, click here.
How to Start Forex Trading
Key Features of the Forex Market
- High Trading Volume: The forex market records over $6.5 trillion in daily volume (tick-based, as it’s decentralized). This massive volume contributes to smooth price formation.
- High Liquidity: Traders can enter and exit positions easily without major price slippage, making forex the most liquid market.
- Global Participation: Accessible worldwide through any device with internet, enabling continuous market movement across different time zones.
- High Leverage: Forex offers significant leverage, allowing traders to control large positions with small capital. However, it increases both profit potential and the risk of losing 100% of the investment.
- Diverse Participants: Includes central banks, commercial banks, hedge funds, corporations, retail traders, and speculators — all influencing currency prices.
Trading Instruments in Forex
In forex, traders buy and sell currencies in pairs, not individually like stocks. One currency is exchanged for another. Each pair contains a base currency and a quote currency. For example, in EUR/USD, EUR is the base, and USD is the quote.
Example: The current exchange rate of EUR/USD is 1.0772. (Rates change daily.) For real-time quotes, click here.
Major Currency Pairs
- EUR/USD (Euro/US Dollar): The most traded pair globally. Current rate: 1.0772.
- USD/JPY (US Dollar/Japanese Yen): The second most traded pair. Current rate: 155.78.
- GBP/USD (British Pound/US Dollar): Known as “Cable.” Click here for the current rate.
- USD/CHF (US Dollar/Swiss Franc): Click here for the current rate.
- AUD/USD (Australian Dollar/US Dollar): Click here for the current rate.
Minor & Exotic Currency Pairs
Minor Pairs: Currency pairs that do not include the USD (e.g., EUR/GBP, GBP/JPY). Click here for current rates.
Exotic Pairs: Combine one major currency with a currency from a developing economy (e.g., USD/TRY, EUR/TRY). Click here for current rates.
Cross Currency Pairs
Cross pairs exclude the US dollar, such as EUR/JPY and GBP/JPY. Click here for current rates.
Conclusion
Starting forex trading requires patience, emotionless decision-making, consistency, and continuous learning. Understanding both technical and fundamental analysis, selecting a reliable broker (not an easy task), developing a sound strategy like Volume Spread Analysis (VSA) or price action, and practicing disciplined risk management (use our Risk Management File) increases the chances of success.
However, forex trading involves significant risks — including the possibility of losing 100% of your capital. Trade responsibly and only invest money you can afford to lose.