Forex Frequently Asked Questions-
Q: What is Forex trading?
Forex, Foreign Exchange Market, is an international exchange market where currencies from all around the world are traded. It involves buying and selling different currencies of the world.
Forex market is the largest trade market in the world, yielding $1.9 trillion daily. It is traded all around the world but United States, Japan, United Kingdom, and Europe have the most active Forex traders.
Q: How Forex trading works?
Forex is often traded in pairs, for example USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. You get ‘short’ in one currency and you will get ‘long’ in the other one. Unlike conventional stocks market, Forex trading does not have a centralised trade market.
It is considered as Over-the-Counter or Inter-bank as trades are done between two counterparts via electronic network or telephone connections. Forex works truly as a 24-hour market.
Everyday Forex trade begins when the financial centres in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always respond to the market regardless of the local time.
Q: How high are the risks in Forex trading?
The risks of losing money in Forex trading can be high, but it is controllable via proper education and trading system. Trading system is a must in Forex trading. Charts, graphs, or pivot points are helpful to indicate the right time to enter or exit the market.
Rewards in Forex trading can be very lucrative if traders manage their risk properly.
Q: What are the major traded currencies?
Major traded currencies are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollar.
Q: What tools do I need to start trading Forex?
You do not require much to start trading Forex: a funded Forex account and a computer with Internet connections are sufficient for you to start trading foreign currencies. However, proper Forex education and systematic trading tools are highly recommended to minimise your risks in Forex market.