Forex is the global bank-to-bank currency market. Due to the constant changes in currency prices, buying a currency at a low price and selling it at a high price, you can take profits and capture more of this movement correctly (for example: correctly identify the news).
Partners in the foreign exchange market are: banks (central and commercial banks), pension funds, insurance companies, brokers, traders and individual investors.
Due to the large number of participants and transactions of a similar size, many transactions are completed in a few seconds. Huge capital is not required to trade forex as the broker can give you a double loan. Its volume is 100 times the amount you deposit, which means that the trader (participating in Forex) enters the market with an amount 100 times more than the amount allocated for executing transactions. The forex trading agreement consists of two parts.
First: the trader opens a position on a specific currency pair.
Second: He closes the position for this pair.
Forex trades are automatically closed in a few seconds. However, even this number of trades made by traders cannot have a significant impact on the price. When opening a Forex position, one currency is ordered from a broker in exchange for a specified amount of another currency. The cost of the base currency at the beginning of the pair is the price and is displayed in the price unit of the currency. It contains two numbers: the bid rate – the cost of selling the base currency to get the second currency in the pair, and the ask rate, The difference between them is called the spread, which is the difference between supply and demand (which is the broker’s main source of income), and the point is the lowest price movement that can be accepted.
Information about the currency is always available to those who work in the foreign exchange market.
Trading Forex is done in three ways.
These methods involve multiple trading strategies.
Traders with extensive experience in Forex have been developing their own strategies for several years, but there are some highly recommended and useful strategies:-
Trade within a day and it is short term and it is the opening of short term trades by the trader for a period of a minute or two and up to two hours.
Such trades are usually closed on almost the same trading day and are never carried over to the next day. – Act based on the news. Traders can always make stable profits by properly analyzing the published news.
At the same time, the wrong analysis of the news and the preparation of positions can lead to huge losses. Medium Term Trading.
According to this type of trading, the trader opens deals for long periods of time (from a day or two to a month or two).
It is possible to make profits using this strategy if the deal stays open for more than several days. These deals need good capital to back them.
Forex technical analysis consists of:
From the ability to appreciate various types of charts (Japanese candlesticks, lines) of currency pairs and the numbers displayed on them and to carry out the correct analysis, which provide an opportunity to predict fluctuations in currency pairs. The carry trade profits from the difference in interest rates between currency pairs. In this type of trading, the trader’s positions remain open for long periods of time (from two or three months to a year or more).
This capital is used to wait until the transaction becomes profitable in order not to suffer losses until the price moves in the right direction. Also, one of the main advantages of Forex is that Forex work is 24 hours and 5 days a week (Monday to Friday) and therefore you can continue trading regardless of time and place differences.
Such an opportunity to trade foreign exchange is provided by global financial centers managed by national banks with international banks storing countries’ capital.
The main banks of them are located in: New York, London, Tokyo, Paris, Luxembourg, Singapore and Austria. These banks provide FX liquidity support day and night.
Regardless of the amount of leverage, it is not a good idea to invest all available funds at once. Ideally, each trade should account for 1% or 2% of the deposit. Make sure you set a stop loss, this will significantly reduce your risk.
Also, it is always possible to change the leverage size to a higher or lower size depending on your preference, forex trading experience and risk appetite. So you can get more profits.
It’s up to you to choose the best!
