{"id":215421,"date":"2019-03-14T09:24:05","date_gmt":"2019-03-14T13:24:05","guid":{"rendered":"https:\/\/insidebitcoins.com\/?page_id=215421"},"modified":"2024-05-14T06:11:11","modified_gmt":"2024-05-14T06:11:11","slug":"forex-trading","status":"publish","type":"page","link":"https:\/\/insidebitcoins.com\/forex-trading","title":{"rendered":"What is Forex Trading? Learn to Trade Forex Now"},"content":{"rendered":"

Forex trading refers to the buying and selling of currencies – with the view of making a profit from ever-changing exchange rates. Crucially, the forex trading industry is one of the largest investment spaces globally – with trillions of dollars worth of currencies changing hands each and every day. <\/span><\/p>\n

Interested in getting started but not sure how to go about it? Then read our in-depth guide on forex trading. We will cover everything you need to know about such as what forex trading involves, the key trading terms you need to be aware of, how to select a US forex broker, how to trade step-by-step as well as key forex trading tips <\/strong>and strategies to ensure you get off on the right foot!<\/span><\/p>\n

What is forex trading?<\/h2>\n

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In a nutshell, forex trading is an investment arena that involves buying and selling currencies. Think along the lines of the US dollar (USD), British pound (GBP) and Euro (EUR). The overarching concept is to make money when the exchange rate of a currency \u2018pair\u2019 changes price. Each forex pair will have two competing currencies on either side of it. <\/span><\/p>\n

For example, GBP\/USD would mean that you are trading the exchange rate of the British pound and the US dollar. If the current price of the pair was 1.31, this means that you get 1.31 USD per 1 GBP. You would then need to speculate whether you think the price of GBP\/USD will go up or down. If you speculate correctly, you make money. If you don\u2019t, you lose money.<\/span><\/p>\n

How does forex trading work?<\/h2>\n

Let’s look at a quick example of how a forex trade might work<\/p>\n

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  1. You want to trade the exchange rate between the Euro and US dollar (EUR\/USD)<\/span><\/li>\n
  2. The price of EUR\/USD is currently 1.10<\/span><\/li>\n
  3. You believe that the value of EUR will increase against USD, so you place a \u2018buy\u2019 order.<\/span><\/li>\n
  4. The value of your trade is $500.<\/span><\/li>\n
  5. A few hours later, EUR\/USD increases by 10% to 1.11.<\/span><\/li>\n
  6. You close your trade to lock in a profit of $50 (10% of $500). <\/div><\/div><\/span><\/li>\n<\/ol>\n

    As you can see from the above example, you placed a \u2018buy\u2019 order because you believed the value of EUR would increase against the USD. Crucially, this is always the case if you think that the <\/span>left-side<\/span><\/i> of the forex pair will <\/span>increase<\/span><\/i> against the currency on the <\/span>right<\/span><\/i>. If it does, then the currency pair will increase in value – as it did in the above example.<\/span><\/p>\n

    At the other end of the spectrum, if you felt that the value of USD would in-fact increase against EUR, then you would need to place a \u2018sell\u2019 order. This is because you are bullish on the currency listed on the <\/span>right-hand side<\/span><\/i> of the pair. As such, you would want the exchange rate of the currency pair to go <\/span>down<\/span><\/i>. <\/span><\/p>\n

    What are the most traded currency pairs on the Forex market?<\/span><\/h2>\n

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    The trading pairs that have been deemed the largest due to their consistency and large volume in daily trading are as follows (Not in order, as they change the order of most volume obtained daily): <\/span><\/p>\n

    USD\/CAD<\/span>, EUR\/USD<\/span>, GBP\/USD<\/span>, NZD\/USD<\/span>, AUD\/USD<\/span>, USD\/JPY<\/span>, as well as EUR\/JPY,<\/span> EUR\/CHF<\/span> (Swiss Franc), EUR\/GBP<\/span>, and AUD\/CAD.<\/span><\/span><\/p>\n

    So now that you have a basic idea of what forex trading is, read on to find out how to get started. <\/strong><\/p>\n

    Step 1: Select a Forex Trading Platform<\/h2>\n

    Your first port of call will be to select a forex trading platform where you wil<\/span>l be able to buy and sell currencies. The best trading platforms<\/a> come in a range of shapes and sizes, so you need to find a platform that meets your individual requirements. Consider the following factors when joining a new forex trading platform. <\/span><\/p>\n

    <\/i> How to select a forex trading platform<\/strong><\/span><\/p>\n

    <\/strong><\/p>\n