5 Things Every Forex Trader Needs to Know

Getting Started in Forex

The Foreign Currency Exchange Market is the largest and most liquid in the world.

More than $3 trillion in foreign currencies trade back and forth every day.

Forex stands for the FOReign EXchange—the financial exchange on which governments, banks, international corporations, hedge funds and individual investors exchange foreign currencies.

The Forex market is used by smart traders for speculation, hedging and long-term profit taking. And anyone can trade in the foreign currency market.

Currencies Are Grouped In Pairs

When you trade in the stock market, you buy or sell the stock of one company.

When you trade in the forex market, you buy or sell a currency pair (two currencies put together). Imagine each pairing as a tug-o-war, the stronger currency pulls the price of the currency pair in its direction.

As you begin investing in the forex market, you should focus on the major pairs and some of the crosses. As you progress, you can consider investing in some of the exotic pairs.

Supply & Demand Drive Currency Prices

As the supply of a currency increases, the currency becomes less valuable. Conversely, as the supply of a currency decreases, the currency becomes more valuable.

On the other side of the economic equation, we find demand. Demand is the measure of how much of a particular commodity people want at any one time.

Demand for a currency has the opposite effect on the value of a currency than does supply. As the demand for a currency increases, the currency becomes more valuable. Conversely, as the demand for a currency decreases, the currency becomes less valuable.

Currency Can Move Up, Down or Sideways

The key is to find recurring patterns that can put you in position to benefit from future movements.

The forex has many nuances like heavy leverage and unique margin.

Building solid rules and managing consistent trading methods are key in this market.

The Forex Market is Available to Everyone

You don’t have to be a mathematical genius or an economist to trade in the forex market.

You simply have to learn what trading signals to watch for and how to respond when you see those signals.

Check out LearningMarkets.com[14] to get started in Forex trading today!