What is Forex Trading and How Does it Work?

Forex trading is one of the largest markets and trends for investment in the current period, and the process of trading is called foreign exchange trading or called in English “Forex” which is an abbreviation of the word foreign exchange, and according to data of the Bank for International Settlements (bis), the value traded in Forex daily exceeds 5.1 trillion USD .

And Forex trading in its simple meaning is trading foreign currencies in other currencies, which means selling one currency in exchange for buying another currency, and it is called trading pairs of money with each other in the trading deal, as a dollar may be sold against the euro, or the euro is sold in exchange for buying a dollar.

The market has self-imposed controls and expectations that govern the trading process, or expectations of the rise of another currency and landing that make people trade in the currency, or expectations of the growth of the economy of a region or a country that makes companies go to buy the currency of this region, and there are factors that control and move the Forex market we will mention In the article.

Currency Trading – Is Forex Trading Only for Companies?

Forex trading

Forex is no longer limited to large companies, and trading between large financial institutions only, but it has become easy for people to enter trading operations due to the entry of modern technology in this market, and the presence of brokers that allow people to trade while they are in their homes, but that trading has become available over the course of 24 hours through the network of banks located in the main trading areas, which are 4 regions (New York, Sydney, London and Tokyo).

Online Trading – How Do Currency Markets Work?

Forex is not traded on the stock exchanges, unlike some stocks or some commodities, but rather the process of trading between two parties in what may be called the parallel market (otc), and since there is no central region for Forex trading, trading became available 24 hours a day, 5 days a week This allows trading from Monday to Friday, and there are three different types of Forex markets:

Spot Forex Market:

This type can be known as the physical trading of a currency pair immediately or over a very short period of time, and this occurs at a specific point of trade settlement.

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FX Forwards:

This type of trading is administered through an agreement to shop for or sell a selected amount of a selected currency at a price determined, on a selected date or on several dates that are predetermined when the deal is concluded.

Future Forex Trading:

Forward trading may be similar to future trading in the contract of sale or purchase at specified prices and on a specific date in the future, but the point of difference is that the future trading of currencies is legally binding.

Currency Trading – What Should You Do When Trading Forex?

When you start the process of trading Forex forex yourself you will start trading a pair of currencies, meaning that you will sell a currency against a currency or buy a currency against a currency, and the two most traded currencies are the dollar and the euro, then you should know the market expectations or at least follow the details that affect the currencies and the rise Currency and its decline, such as political and economic stability and others.

For example, if you expect that the dollar will rise and strengthen, while the pound sterling, then you must sell the pound sterling against the US dollar, but if you expect the opposite, which is the weakening of the dollar against the pound sterling, then you should buy the pound against the dollar.

Conclusion

In conclusion, it is very important as we mentioned to you that you care about expectations and follow-up operations of buying and selling, supply and demand in the market, as it is one of the factors that greatly affect currency trading, while following the global market and news and all the reasons that make you aware of the market and what is going on around you in this matter.

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