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Trading forex and forex 2021 - 2022


In this post, we will explain forex and forex trading 2021-2022 as currency trading for beginners can be very challenging. This is mostly due to the unrealistic expectations common among new traders. What you need to know is that forex trading is by no means a get-rich-quick scheme.


What is forex trading?

Let's know what is forex trading

The forex market or the foreign exchange market and in English Forex - which is the abbreviation of Foreign Exchange - is one of the largest financial markets in the world in terms of trading volume of more than 4 trillion dollars per day.

It is the trading of one currency for another, often with the aim of making a profit.

Currency pairs and trading price

Currency pair trading price

It is the value of the quoted currency that you can buy for one unit of the base currency.

For example: the euro and the US dollar are the most popular and traded currency pair in the forex market.

When looking at the exchange rate of the Euro against the US Dollar, you want to know how many dollars (the quote currency) you can buy for 1 Euro (the base currency).

    If the EUR/USD exchange rate is 1.2356, this means that you can buy 1.2356 USD for every 1 EUR.

    If the exchange rate is in an upward trend, this means that the base currency is getting stronger against the secondary currency.

    But if the exchange rate is in a downtrend, this means that the base currency is weakening against the secondary currency.


An explanation of currency pair trading

Forex Market Forex Market

With more than 4 trillion USD in liquidity circulating in the market daily, the forex market is arguably the most liquid in the world.

In principle, this means that you can buy almost any currency as you wish and at any time when the market is open.


Market opening hours are the main factor that determines the advantage of forex trading.

The forex market is open 24 hours a day, 5 days a week.

Trading in the global market begins in New Zealand, then in Australia, Asia, Europe, and finally in the USA, allowing currency trading at any time of the day or night from Monday to Friday.


What are the factors that affect the forex market?

There are several factors that affect currency exchange rates in the forex trading market, such as the political and economic stability and monetary policy of countries.

However, since forex trading is live, it is speculation that mainly affects price changes in the market.

If traders expect that for some reason or event a particular currency will strengthen or weaken, they will trade and change the price in the market, because the supply and demand for the destination currency will change within the market.

The more people expect the currency to move in a certain direction, the greater the effect on prices in the market.

 

What to do when trading forex?

When you trade forex you will always trade a currency pair, ie you will buy or sell one currency for another.

If you predict, for example, that the British pound will weaken against the US dollar, you should buy British pounds against the US dollar.

But if you expect the opposite (ie you expect the US dollar to strengthen), you should sell the British pound against the US dollar.

With this in mind, you can always take a position in the direction that you assume the market is going, and this will increase your chances of trading.

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