Forex Trading What it is and how it works. Beginner Trading Guide
What is Forex trading? Forex is the largest and most liquid financial market in the world and it is also what has historically guaranteed the best results to traders. Doing forex trading means extracting high profits from changes in currency exchange on Forex. This guide contains a complete introduction to Forex trading, also suitable for beginners.
Forex What is it
Before you begin to deepen the operational aspects related to forex trading, you should ask what is forex.
Forex is the financial market where currencies are exchanged. Very often you associate with Forex the idea of buying dollars, buy Yen... This idea is not completely correct.
Because? Because it is impossible to buy dollars without selling another currency at the same time, for example Euro. So on the forex are quoted the currency pairs rather than the individual currencies.
Forex is considered the world's largest market: In fact the total volume of forex transactions is considerably higher than that of any other financial market. Moreover the forex market is extremely liquid and efficient and this is a huge advantage for all those who want to invest or to trade.
Forex How it works
There are different types of forex transactions that we can distinguish, substantially, in actual transactions and speculative transactions. The actual transactions are those that have the objective of actually making a currency exchange, for example for international trade.
Speculative transactions are the ones that interest us here. The goal of these forex trading operations is to generate a high profit, with minimum risk and in the shortest time possible.
The operation of Forex is not at all complicated as you can think and is really affordable for everyone, even those who have never done any kind of financial transaction, provided to devote a minimum of time and commitment to the study.
To understand how the Forex works we start from the chart above, generated by the platform Plus500, one of the best platforms for forex trading globally.
The graph shows the real-time quotation of the euro/dollar currency pair. If you think that the euro will be strengthened on the dollar then you have to click on the Buy button, if you think it will be the dollar to strengthen you have to click on Sell.
Attention: In this case we talk about a sale in the open, so you can sell even without having first bought: it is a typical speculative maneuver.
It is important to note that with Forex trading platforms you do not buy currencies, but financial contracts that have as underlying currency pairs. The advantage is that it is possible to invest a very small capital (even only 100 euros) but the profits obtained can be multiplied by the application of a leverage.
Forex Trading: Best Platforms
The first step to achieving success with Forex trading is to accurately choose the best platforms. There are thousands of forex platforms and anyone who has a minimal forex experience knows that often advertising some platforms can be really pounding.
Better ignore this advertisement and go really to the chase. What are the best forex trading platforms? First of all, we recommend that you only use authorized and regulated trading platforms.
The regulated platforms, in fact, are subjected to continuous inspections by the supervisory authorities (the consoes for USA) and therefore must be honest and reliable. Unfortunately not all Forex platforms are honest: there have been cases of fraud implemented by unauthorized trading platforms and regulated.
The choice of a regulated platform is the first step to be successful with Forex trading but there are also other aspects to be verified accurately. For example, you must verify that the platform does not apply commissions and is completely free.
Still, a good forex trading platform is easy to use, even for those who are not experienced. Many of the best forex trading platforms offer free Forex trading courses or other innovative services
