Beginner’s guide to Forex trading
Have you always been interested in learning forex trade but didn’t know how? Then you are at the right place because here we will make understanding forex easy and simple for you. The forex market is unimaginably huge and trillions of dollars worth of currency are being traded on global forex markets every day. The global forex trading hub is the London Stock Exchange, with over 40% of currency transactions being conducted in London. Thanks to the internet, the basics of forex trading can be learned by anyone, but you need detailed information to help make an impact in the market. This is why we have crafted this ‘trading in forex for beginners’ guide where you will learn all the basics related to forex trading. Let’s get to the crux of things.
Everything you need to know about forex trading
Forex trading is one of the largest and most liquid markets in the world. Well over 5 trillion USD worth of currency is traded on forex exchanges daily throughout the world. That is all nice and good, but what is forex and how does it work? To keep things simple and easy, just keep in mind that the process of any currency being traded against another currency is referred to as forex trading.
History of Forex trading
The oldest known trading system is called the barter system, and in this system, things are exchanged against each other. Salt and spices were a very popular medium of exchange because their prices remained relatively stable throughout the year. Ships would sail from their countries to come to a trading point and this was the beginning of global trade. As the barter trade progressed and the markets around the world grew, barter trade became too inefficient and confusing, and thus gold coins were introduced to streamline the trading process.
Gold coins quickly caught on and they became the centerpieces of global trading. With the passage of time, gold started to become too inefficient, as it was heavy to carry and there was always the fear of theft. Around the year 1800, governments all over the world started introducing the gold standard. The gold standard dictates that the government would be able to redeem the amount of paper money in current gold’s value upon request. This was the beginning of paper currency that we see all around us.
Forex market size
The sheer size of the forex market makes it one of the best markets to trade in. Apart from the size, the liquidity offered by the forex market also makes it one of the most attractive investment opportunities for many people. Discussing the size of the forex market is important because it will give the new traders an idea about how much money is there in the forex market and its solid roots. The size of the forex market is around $6 trillion, which means this amount of money is traded on forex markets throughout the world. When compared with other investment and trading alternatives such as bonds and company shares, forex markets simply dwarfs all of them.
Forex vs stocks: key differences
Anyone considering forex trading might also be tempted by the prospect of stock trading. The stock market is also huge, and it can also return some handsome benefits, but the upsides offered by the forex market makes it one of the best available ways to trade. If we compare both markets on key parameters, the difference becomes very clear. For instance, forex can be traded 24 hours a day, 5 days and week versus 8 hours a day stock trading. Similarly, the forex market is very liquid, which means you can quickly sell your positions and convert your money into cash. On the other hand, the stock market is not nearly as liquid, and there are some complications associated with stock market liquidity. Similarly, the forex market usually has no or very minimal commissions as compared to stock markets, where brokers take a hefty commission. There are many other differences among the two markets and all in all, the forex market is a generally less complicated (although just risky) way to invest, at least in the short-term as compared to other markets.
How to learn Forex trading?
The concept of selling and buying currencies might sound enticing to you and you may be eager to start your own career as a trader, but before you do so, you should learn the basics of forex trading such as the concept of forex leverage, what does a forex trader do, how broker exchanges works, and what are the costs associated with forex trading. For this purpose, we have created some useful resources for you which you can find easily.
How to start Forex trading?
Starting forex trading is very simple these days with the onset of electronic trading opportunities. In the past, the concept of forex trading was only of interest to governments, big corporations and hedge funds, but today anyone with a computer or mobile phone and some free funds can start forex trading. Of course, that doesn’t mean that forex trading is very simple and easy. The potential to earn money in forex exchange is indeed huge, but only if you know what you are doing. That being said, if you are interested to know how you can start forex trading as an individual trader the process itself is rather simple. You need to open an account with any of the numerous brokers, deposit some initial funds and you are all set to execute your trades.