The Basics of Forex
Forex, or Foreign Exchange, is the global marketplace for exchanging national currencies against one another. With a daily trading volume of over $6 trillion, it is the largest and most liquid financial market in the world—dwarfing the stock market.
Unlike the stock market, there is no central exchange. Instead, currency trading is conducted electronically over-the-counter (OTC), meaning all transactions occur via computer networks between traders around the world, rather than on one centralized exchange.
How Does Forex Trading Work?
Forex trading is always done in pairs. When you trade forex, you are simultaneously buying one currency and selling another. For example, in the EUR/USD pair:
- The first currency (EUR) is the Base Currency.
- The second currency (USD) is the Quote Currency.
If you believe the Euro will increase in value against the US Dollar, you buy (go long) the EUR/USD pair. If you think the Euro will weaken, you sell (go short).
Why Trade Forex?
24/5 Market
The forex market is open 24 hours a day, 5 days a week, allowing you to trade whenever it suits your schedule.
High Liquidity
With so many buyers and sellers, you can enter and exit trades instantly at fair market prices.
Low Barriers to Entry
You don't need a large amount of capital to start. Many platforms allow you to start with a small deposit.
Leverage
Brokers offer leverage, allowing you to control a larger position with a smaller amount of capital.
Getting Started with a Platform
To start trading, you need access to a trading platform. A good platform provides you with real-time charts, technical analysis tools, and news feeds to help you make informed decisions.
Modern platforms are user-friendly and available on both desktop and mobile devices, ensuring you never miss a trading opportunity.
Ready to Experience the Market?
Sign up for a free demo account to practice trading with virtual funds before you commit real capital.
Open Your Free Demo Account