Forex trading for beginners
If you are looking for forex trading for beginners reading, read this article. Forex is not for everyone. It lures with big profits but carries a big risk of big losses. If you are a beginner and have decided to start trading, in this article you will find the basics about forex. This way, you will decide whether to move forward. In the tips and hints category, you can keep an eye out for similar articles that are suitable for both beginners and advanced users.
What is Forex?
FOREX or Foreign exchange is an international currency exchange market. It is a network of financial institutions servicing international business currency transactions. The market participants can trade in different national currencies.
Forex is worth over $ 1.5 trillion a day, compared to the US $ 300 billion on the stock market. The forex market is the largest and most liquid in the world. The market is open 24 hours, five days a week, and closes only on public holidays and weekends. Forex trading begins with the opening of the market in New Zealand, a little later Australia and Singapore are included, followed by Japan, Europe, and finally the United States. In this way, any currency trader on the market will be able to react immediately to open or close a position at a convenient time for him.
Where we can trade on the FOREX market? Forex trading for beginners
Forex does not have a specific place and does not imply a personal meeting between the participants, insofar as they are in direct and constant contact with each other using various technical means. The transactions are carried out through computer terminals, like MetaTrader to which large banks (commercial banks) and brokerage houses are connected.
Commercial banks specializing in foreign exchange trade serve the foreign exchange market as dealers. They make deals both on behalf of their clients and on their own accounts.
Today’s advanced and modern global information and communication network made a single global currency market. With the development of the Internet and information technology in the forex market, small investors also became involved, which contributed to the increase in liquidity (turnover) and narrowing of spreads, and the reduction of commissions.
What is the most used trading platform by retail traders?
The most used trading platform for retail traders is MetaTrader. MetaTrader is an information and trading platform developed by MetaQuotes Software Corp., intended for brokerage organizations in the Forex or Futures markets. This is a closed-loop complex. Brokerage service organizations do not need additional software in the presence of MetaTrader 4. Works on Windows operating system. Every financial instrument for trading on MetaTrader is based on CFD. By August 2010, the fourth version of the platform was being actively used and the fifth version had already been released. The first, second, and third versions of the platform are not used and are not supported. You can use web meta trader on our website.
Forex trading for beginners. What is CFD?
CFD or Contracts for difference are financial instruments through which stock prices, stock indices, currencies, commodities, and cryptocurrencies are traded. Note that they only trade prices. In other words, when you trade contracts for a difference, you do not buy real shares and do not actually acquire oil, gold, or dollars.
What you are doing is trading only the price of these assets and trying to profit from the change in price. For example, if you buy a CFD, you will win when the price goes up and you lose when the price goes down. It is important to note that the price of contracts for difference is 100% the same as the price of real financial instruments. CFDs are traded through margin trading.
What is Margin trading?
The purpose of the margin is to be obtained by borrowing funds from the broker himself. Which the client can use to trade in instruments with a value significantly exceeding the guarantee amount. The economic point of using a margin is that the client is able to make a profit on the entire open position while limiting the amount of money invested to the amount of the margin paid.
What is a Margin call?
This is a requirement made by the broker to the client to deposit a sum of money so that the margin does not fall below the minimum value required by the broker.
What is Leverage?
Leverage is the ratio of the margin requirement. The greater the leverage, the greater the deal you can make with the funds available in your trading account. If for currency trading, the leverage you can trade is for example 1:30. This means that if you have 1 000 dollars in your trading account, you can make a deal with a value of 30 000 dollars.
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