Forex trading
Foreign exchange (forex or FX) trading is the process of buying one currency and selling another to make
a profit. Traders try to earn money by taking advantage of changes in exchange rates between different
currency pairs, like the Euro against the US Dollar (EUR/USD) or the British Pound against the Japanese
Yen (GBP/JPY). Because global trade and finance involve so many countries, forex is the largest and most
liquid market in the world.
CFDs & Forex
Another way of looking at it is that forex is mostly driven by global events and However, all instruments
will be affected by multiple factors and can also be impacted by unprecedented events. There is no fixed
guide to trading, so we always recommend seeking independent advice and keeping a close eye on all your
open trades.
CFD stands for ‘Contract for Difference’, and a CFD commits you and your broker to exchange the
difference in the price of an underlying asset between the opening and closing of your CFD position. CFD
futures trading allows you to use leverage to gain bigger exposure to the market while not directly owning
the underlying asset.
CFDs are mostly impacted by the supply/demand of the performance of underlying instruments.
How to Earn
Earning through FOREX trading requires a good understanding of how currency markets work, along with
disciplined strategies and smart risk management. Start by learning the basics, like how currency pairs
work and how to analyze the market using both technical and fundamental approaches. Key factors that
influence currency prices include economic news, political events, and changes in interest rates.
It's important to develop a clear trading plan. This plan should outline when to enter and exit trades,
how much risk you're willing to take, and the size of your trades. Practice on demo accounts to build your
skills without risking real money, and keep learning so you can adjust to changes in the market.
Success in FOREX trading often comes down to patience, consistency, and keeping your emotions in check to
avoid impulsive decisions.
Terms to Know
Ask - The lowest price at which someone is willing to sell a currency.
Base Currency - The first or left-side currency listed in a currency pair.
Bid/Ask Spread - The difference between the buying (bid) and selling (ask) price of a
currency pair.
Contract for Difference (CFD) - A derivative that lets traders speculate on price
movements without owning the underlying asset.
Margin - The amount of money required to hold a leveraged position.
Pip - The smallest standard unit of price movement in a currency pair, typically the last
decimal place.
Long - Buying a currency pair with the expectation it will increase in value.
Short - Selling a currency pair with the expectation it will decline in value.
Something nobody tells anybody……
An interesting aspect of world forex markets is that it has no central or physical marketplace. Instead, currency trading is done electronically Over The Counter (OTC) and transactions occur via computer networks that connect traders worldwide. Markets operate via a series of connected trading terminals and computer networks and participants include institutions, investment banks, commercial banks, and retail investors worldwide.
