Forex Trading for Beginners: What It Is and Why You Should Care

So what exactly is Forex, and how can you get started? The article below outlines everything you need to know about forex trading for beginners. Read on to find out more.

What is Forex?

It’s a hub for trading world currencies. It’s commonly known by a variety of names, including foreign exchange, FX, and currency trading. It’s a decentralized global market in which the average daily trade volume exceeds $5 trillion.

If you combine the value of the world’s stock markets, they don’t compare. The best part? Forex is available to anyone who is eighteen years or older.

That means you could open an account and start trading in the next twenty minutes.

Forex Trading for Beginners

Do you remember the last time you traveled to a foreign country? At some point during that trip, you exchanged your U.S. currency for foreign currency.

As an example, if you traveled to Brazil, you exchanged your U.S. dollars for Brazilian reals. The foreign exchange rates (Forex rates) determine just how many reals you get for your dollars.

These rates fluctuate continuously, not just for the real but for every currency in the world. These constantly changing values are the ground on which Forex day trading is built.

One day, you might receive 3.7 reals for each dollar you exchange. The next, you might receive 3.8. These differences may seem small, but they add up.

Imagine, for example, a large company paying foreign employees. Their 10 million U.S. dollars may be worth 37 million Brazilian reals one day and 38 million Brazilian reals the next. What seemed like a small difference is suddenly a huge variance.

Traders speculate on these difference in the hopes of generating a profit.

How it Works

Foreign exchange traders negotiate currency trades based on the currency’s perceived value. If they think the currency will increase in value, they’ll buy it. If they think it’ll decrease, they sell it.

The stock market operates under the same buyer-seller principles. It’s not uncommon to find a scarcity of buyers or sellers on the stock market.

Forex, on the other hand, boasts a much larger market. It’s rare to run into this kind of scarcity when you trade with Forex. Trading up or down is easy.

More importantly, you can do it all from the comfort of your own home. All you need is a small startup capital, an internet-ready device, and an internet connection. Here are a few simple Forex trading tips to get you started.

What’s Next?

If you read our article on Forex trading for beginners and want to learn more, start with our blog. Begin with the Forex trading articles for novices, and work your way up to the intermediate level. May all your trades be successful.

So long and good luck!

This article was written by our in-house forex traders with a combined 20+ years of experience in trading the financial markets.