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What is forex trading?and what are the benefits of forex trading?

LEO

Oct 25, 2021 13:27

What is forex trading?

Forex is one of the most widely traded markets in the world, with a total daily average turnover reported to exceed $5 trillion a day. The forex market is not based in a central location or exchange, and is open 24 hours a day from Sunday night through to Friday night. A wide range of currencies are constantly being exchanged as individuals, companies and organisations conduct global business and attempt to take advantage of rate fluctuations.

Forex is always traded in pairs – for example AUD/USD. You speculate on whether the price of one country's currency will rise or fall against the currency of another country, and take a position accordingly. Looking at the AUD/USD currency pair, the first currency (AUD) is called the 'base currency' and the second currency (USD) is known as the 'counter currency'. 

What are the benefits?

Some of the main benefits of forex trading that make this asset class a popular choice among traders are:

-The ability to trade on margin (using leverage)
-High levels of liquidity mean spreads stay tight which keeps trading costs low
-Prices react quickly to breaking news and economic announcements (this can be a disadvantage too)
-Trade 24 hours a day from Sunday to Friday
-The ability to go long and short
- Wide range of markets 

How do I trade forex?

  1. Decide how you’d like to trade forex

  2. Learn how the forex market works

  3. Choose your forex trading platform

  4. Open a forex trading account

  5. Deposit 

  6. Open, monitor and close your first position


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