KEY TAKEAWAYS

FOREIGN EXCHANGE

Foreign exchange is the exchange of one currency for another by persons, businesses, or governments in different countries. It can also refer to the process of settling accounts or debts between them. Foreign exchange rates are determined by the supply and demand of currencies in a free economy, or by other factors such as pegging to another currency or a basket of currencies. Foreign exchange can affect a country's economy by influencing the cost of imports and exports.

The foreign exchange (forex or FX) market is a global marketplace for exchanging national currencies.

TRADE, COMMERCE AND FINANCE

Because of the worldwide reach of trade, commerce, and finance, forex markets tend to be the world's largest and most liquid asset markets.

Many traders are drawn to forex for the market’s volatility and extended trading hours compared to other markets like stocks or indices. The main benefits of trading forex are that it enables you to: Seize forex volatility Trade around the clock Go long or short Capitalise on high liquidity Make your money go further with leverage

CURRENCY TRADE AGAINST EACH OTHER

The foreign exchange (forex or FX) market is a global marketplace for exchanging national currencies. Because of the worldwide reach of trade, commerce, and finance, forex markets tend to be the world's largest and most liquid asset markets. Currencies trade against each other as exchange rate pairs. Currencies trade against each other as exchange rate pairs. For example, EUR/USD is a currency pair for trading the euro against the U.S. dollar.

FOREX MARKET

The forex market allows participants, such as banks and individuals, to buy, sell or exchange currencies for both hedging and speculative purposes. The foreign exchange (forex) market is the largest financial market in the world and is made up of banks, commercial companies, central banks, investment management firms, hedge funds, retail forex brokers, and investors.

Forex markets exist as spot (cash) and derivatives markets, offering forwards, futures, options, and currency swaps.

MARKET PARTICIPANT

The term market participant is another term for economic agent, an actor and more specifically a decision maker in a model of some aspect of the economy. For example, buyers and sellers are two common types of agents in partial equilibrium models of a single market. The term market participant is also used in United States constitutional law to describe a U.S. State which is acting as a producer or supplier of a marketable good or service.

HOW TO START FOREX TRADING

Learn about forex:

While it is not complicated, forex trading is an undertaking that requires specialized knowledge and a commitment to learning.

Set up a brokerage account:

You will need a forex trading account at a brokerage to get started with forex trading.

Develop a trading strategy:

While it is not always possible to predict and time market movement, having a trading strategy will help you set broad guidelines and a road map for trading.

Always be on top of your numbers:

Once you begin trading, check your positions at the end of the day. Most trading software already provides a daily accounting of trades. Make sure that you do not have any pending positions to be filled and that you have sufficient cash in your account to make future trades.

Cultivate emotional equilibrium:

Beginner forex trading is fraught with emotional roller coasters and unanswered questions. Discipline yourself to close out your positions when necessary.