What is Forex?

Foreign exchange abbreviated as Forex or FX. This is a global decentralized or over the counter (OTC) market to traded or exchange every currency for another with a variety of reasons.

As a result of Bretton Woods agreement in 1971 major currencies were allowed to determine their rate against others by free-floating methods. This gives a variation in exchange rates and started a new era in the foreign exchange (forex) trading services.

Compared to $22.4 billion daily trade volume of the largest stock exchange in the world, according to Bank of International Settlement (BIS) statistics, foreign exchange (forex) market daily turnover is $5.1 trillion. Hence the forex market is the largest financial market in the world.

forex market by LetsForex

                   forex market by LetsForex

Forex Trading

As every country has its own defined currency to run its economy.  While doing international trade, visiting any other country or for any other reason you need to convert your currency into the defined currency of a specific country you are going to trade or visit. The free and floating methods provide by Bretton Woods creates fluctuation in currency rate. This fluctuation gives an opportunity for every participant to invest or speculate. You can be a participant in the foreign exchange market if you exchange your owned currency against another. Forex trading is exchanging of one currency for another and any financial institution or individual can be a forex trader.

Online Forex Trading For Beginners

In the pre-internet era, currency trading was only confined to large financial companies such as banks, hedge funds or individuals with huge financial assets. With the internet revolution, online forex trading becomes so easy that anyone can become a forex trader.  To become an online forex trader you just need an internet connection and a live account with a brokerage firm.

How Much You Need To Start Forex Trading

The online forex trading brokers provide a high level of leverage to its individual account holders. One of the biggest advantages of the forex market is Leverage, it simply means the broker provides a huge amount of money against your invested amount to open a buy or sell order. In other words, leverage is gaining control over a huge amount with the help of small invested amount.

How much you need to start forex trading depends on the broker of your choice. Every broker offers different types of accounts (mini, micro and standard) and minimum deposit requirements, and it all about your choice.

After a successful account opening, the broker/firm provides you with trading software and a unique login and password. Once you logged in to trading software you can participate in the forex market as a trader by opening buy or sell order for certain currency pair or pairs.

Forex Market Hours

Unlike the stock market, the forex market remains open twenty-four hours five days a week. The forex market hour starts with Sydney then to Tokyo, London, and finally to New York. In this way, forex trading just shifts with different financial centers around the globe.

forex market hours

forex market hours by LetsForex

More related resources: 

Introduction to Japanese Candlestick

Most Popular Single Candlestick Patterns

Most Popular Double Candlestick Patterns

Forex Glossary

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