Visit eToro Site Now<\/span><\/a><\/div><\/span><\/span><\/p>\n<\/span><\/span><\/p>\n<\/div><\/div><\/span><\/span><\/p>\nHow Forex Trading Works - What is Forex Trading<\/h2>\n
Currency trading means exchanging between currencies.<\/span><\/span><\/p>\nIf you have ever exchanged euros for dollars, pounds or another currency while on holiday, you have indirectly participated in forex trading.<\/span><\/span><\/p>\nHowever, when we talk about foreign exchange trading in (your country) we are referring specifically to the exchange of currencies in order to make a profit through fluctuations in their value.<\/span><\/span><\/p>\nOne of the most exciting parts of Forex trading is the fact that it is a global market.<\/span><\/span><\/p>\nThis is a big difference compared to stock trading, where individual transactions typically involve only shares of companies based in a given country.<\/span><\/span><\/p>\nThe currency market is also gigantic - more than 5 trillion euros worth of currencies are traded there every day.<\/span><\/span><\/p>\nThe size of this market is dictated by the fact that it is essential not only for the Forex investor, but also for the circulation of the world economy.<\/span><\/span><\/p>\nFor example, if you want to buy clothes made in Italy, you will pay the importing company in pounds, and they will in turn pay the Italian manufacturer in euros.<\/span><\/span><\/p>\nCurrencies are also constantly exchanged by major banks around the world.<\/span><\/span><\/p>\nThe FX Trading market (your country) is open 24 hours a day, five days a week - from 10pm Sunday to 10pm Friday.<\/span><\/span><\/p>\nWhen trading on the foreign exchange market, there is no centralized transaction as is the case with buying stocks.<\/span><\/span><\/p>\nInstead, the buy position is placed on a global computer network and may be brokered by a Forex Broker (your country) or a global broker, bank or any other person trading on the global network.<\/span><\/span><\/p>\nSince online Forex trading takes place all over the world, the market can become very active at any time of the day.<\/span><\/span><\/p>\nCurrency Pairs for Forex Trading<\/h3>\n
One of the basic things that every beginner should know about Forex trading (Your Country) is that the value of one currency is always intertwined with the value of all others.<\/span><\/span><\/p>\nThis is another important difference that distinguishes this market from buying stocks.<\/span><\/span><\/p>\n
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The pound has no predetermined value. The value of the pound is calculated in relation to, for example, the dollar or the euro.<\/span><\/span><\/p>\nThe value of the pound can increase against the dollar or the euro by different amounts, or it can increase against the dollar and decrease against the euro at the same time.<\/span><\/span><\/p>\nTherefore, all transactions made in the Forex (Your Country) market are made through currency pairs. There are three types of currency pairs in the online Forex market:<\/span><\/span><\/p>\nMain Couples<\/h3>\n
In the foreign exchange market, there are seven major currency pairs, all of which are related to the US dollar:<\/span><\/span><\/p>\n\n- EUR\/USD<\/span><\/span><\/li>\n
- GBP\/USD<\/span><\/span><\/li>\n
- USD\/JPY<\/span><\/span><\/li>\n
- USD\/CHF<\/span><\/span><\/li>\n
- USD\/CAD<\/span><\/span><\/li>\n
- AUD\/USD<\/span><\/span><\/li>\n
- NZD\/USD<\/span><\/span><\/li>\n<\/ul>\n
These seven major currency pairs account for the majority of daily Forex trades in (your country) and around the world.<\/span><\/span><\/p>\nIf you want to learn Forex for beginners, you should start by investing in these major currency pairs because they are always available for buying and selling and usually have lower fees associated with them, compared to less popular currency pairs.<\/span><\/span><\/p>\nSecondary Pairs<\/h4>\n
There are over 20 different minor currency pairs. Typically, each of these pairs consists of currencies other than the US dollar (USD) that are part of the major pairs, or are pairs with the US dollar and other world currencies.<\/span><\/span><\/p>\nFor example, JPY\/AUD and GBP\/EUR are considered minor currency pairs.<\/span><\/span><\/p>\nExotics<\/h4>\n
Exotics, refer to currency pairs that are traded less frequently. For example, JPY\/ZAR and EUR\/HUF are considered exotic pairs in the online Forex market.<\/span><\/span><\/p>\nExotic pairs can be quite illiquid \u2013 meaning that few people buy or sell them often \u2013 so these pairs are generally best for Forex traders with advanced knowledge.<\/span><\/span><\/p>\nReasons to Invest in Forex in (your country)<\/h2>\n
The currency market has several features that make Forex trading particularly suitable for beginners. Let\u2019s look at some of the best reasons to invest in Forex trading (Your Country) in 2021.<\/span><\/span><\/p>\n
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Availability<\/h3>\n
For many investors, the main aspect that attracts them to the Forex trading market is its incredible accessibility.<\/span><\/span><\/p>\nFew other markets allow you to log in at any time and start investing immediately.<\/span><\/span><\/p>\nHowever, since the Forex trading market operates 24 hours a day, this is possible.<\/span><\/span><\/p>\nThere are also no restrictions on the type of currency you can invest in, especially compared to the stock market - where most brokerages only offer stocks from one or two countries.<\/span><\/span><\/p>\nMoreover, you do not need a large capital to start trading Forex (in your country) today.<\/span><\/span><\/p>\nSome of the best Forex brokers only require deposits of between \u20ac50 and \u20ac100 to open a real Forex trading account.<\/span><\/span><\/p>\nTherefore, you can start buying and selling currency pairs with just a small initial investment.<\/span><\/span><\/p>\nFinancial Liquidity<\/h3>\n
Due to the high volume of currencies traded daily, finding a buyer for the currency you are trying to sell is virtually guaranteed at any time of the day.<\/span><\/span><\/p>\nThis concept is known as liquidity - there is a constant flow of currency pairs around the world.<\/span><\/span><\/p>\nLiquidity is a good thing because it means you are less likely to get stuck in an investment, unable to sell your position when you want.<\/span><\/span><\/p>\nHigh liquidity is also important as it helps keep the price of your Forex transaction low. Later in this article, we will discuss in detail the costs of Forex transactions and how illiquidity affects them.<\/span><\/span><\/p>\nBuying and Selling in Currency Trading<\/h3>\n
Another interesting element of Forex trading is the ability to bet on the value of any currency falling (against another currency) just as easily as predicting its value rising.<\/span><\/span><\/p>\nWhen <\/span><\/span>you short sell<\/span><\/span><\/em> a currency, you profit from its devaluation.<\/span><\/span><\/p>\nThis allows you more flexibility in hedging your Forex trading positions and creating more complex trading strategies.<\/span><\/span><\/p>\nForex Leverage Trading (in your country)<\/h2>\n
A key aspect of trading the foreign exchange market (in your country) is the ability to use leverage in your transactions (investments).<\/span><\/span><\/p>\nBy using leverage, you can get a loan from your Forex broker to increase the effective value of your investment.<\/span><\/span><\/p>\nFor example, if you open a position with a leverage of 1:10, you can open a market position worth \u20ac1,000 with only \u20ac100 in your live Forex trading account.<\/span><\/span><\/p>\nThe advantage of using leverage is that your profits will be multiplied.<\/span><\/span><\/p>\nLet\u2019s say you buy GBP\/EUR with a leverage of 1:10. If the euro rises by 1% against the pound, the value of your position will increase by 10%.<\/span><\/span><\/p>\nBy using leverage, you can make significant profits with small fluctuations in the value of a currency pair.<\/span><\/span><\/p>\nIn addition, it is possible to invest in several Forex trading pairs in order to hedge your positions, as a small investment is enough to open large positions.<\/span><\/span><\/p>\nForex Transaction Costs (in your country)<\/h2>\n
One of the best things about Forex trading (in your country) is that it is almost always commission free.<\/span><\/span><\/p>\nInstead of charging a flat fee of a few euros per investment, most Forex brokers in (your country) charge a spread.<\/span><\/span><\/p>\nThe spread is the difference between the amount you can buy a currency pair for and its potential selling value at the same time.<\/span><\/span><\/p>\nSpreads vary by currency pair and broker, ranging from 0.05% to 1% or more. Generally speaking, the tightest spreads can be found on major currency pairs, while the tightest spreads can be found on exotic pairs.<\/span><\/span><\/p>\nWe should point out that if you trade Forex using leverage, you will likely incur additional fees.<\/span><\/span><\/p>\nMost brokers charge overnight interest - so-called swap fees - if you hold a leveraged position after 10pm (GMT), despite the fact that the FX market \"never sleeps\".<\/span><\/span><\/p>\n