Basic Forex definitions and concepts for the beginners
Build up or scatter around
It seems that a beginner does not need to learn the terms of the Forex market if he/she is going to learn all about Forex reading books or watching a Webinar, where he/she will automatically understand and learn all the terms. However, it is important to know the terms in advance, as you should start from the very beginning, from the base of the system in order to have a coherent and complete picture of the trading world and your place in it. Will you agree that it is very inconvenient to keep things, if you do not have proper storage place. It will be difficult for you to find a thing you need. If you have shelves or cupboards you can easily arrange your stuff properly and later, you will know where to find as thing, which you need. The same happens with your memory. Knowledge also needs to be stored on the “shelves” or have a storage place in your memory. In order to organize a proper system in your head, you need to start learning about Forex from the very beginning. Each Forex definition can be compared with a branch of a tree, on which numerous leaves will grow, in our case it will these are the details and peculiarities of trading at Forex.
How does Forex work? Essential structure
Do you know the origin of the word “Forex”? The word “Forex” consists of the first syllables of two English words: Foreign Exchange, which means Currency Exchange.
Forex is an international currency exchange, participants of which are, first of all, the leading banks and financial regulators of different countries, and, secondly, people just like you and me: Forex traders.
The first ones use facilities of Forex market for exchanging national currency, the latter ones use brokerage services for trading on difference in rates, thus, earning some profit. Brokers give a chance to traders participate in the Forex market and carry out sell or buy transactions using their facilities.
Brokers need to have a license, which gives them access to the Forex market. The access to Forex is not available for everyone. You need to be a client of a brokerage in order to get access to the market and then, carry out buy or sell trades. All exchange rates of all national currencies at the Forex are rated versus each other. For example, currency pair Euro/Rub is at the level of 74 rubles. That is, one Euro costs 74 Russian roubles. If you buy the EUR at a price of 74 Roubles and three days later exchange rate has changed to90 rubles, you will earn 16 rubles of profit.
Attractive features the Forex currency market
Have you ever thought why popularity of Forex currency market is increasing every day, attracting great number of investors and traders? The fact is that Forex is a unique place, which is different from other exchanges. Let’s look into advantages of Forex market.
Liquidity of the currency market is a market’s ability to purchase or sell assets quickly. High liquidity of the asset means that is can be sold quickly in the market. High liquidity of the currency market is based on the following factors:
- The number of the currency market participants is very large; most of them are major financial institutions, which usually carry out large-scale deals in the market.
- Forex market does not have strict work schedule, operating 24 hours a day. That is why market is active all the time as after the completion of one trading session, the other session just begins. Therefore, currency movement is ongoing continuously.
- Currency market is a market of exchanges in the national currencies, which also increases liquidity in the Forex market.
As you know, everyone, who has access to Internet can become a Forex trader. You even do not need a PC now as you can trade just on your phone or other modern devices. Forex market is available and affordable for all!
Margin trading on is a big advantage of the Forex market, as Forex brokers provide leverage to their clients, enabling them to use larger funds for trading, than they have available. Trader’s profit depends on the volume of a transaction. The higher is the volume of the deal, the higher is your profit.
You do not need to have a fortune in order to trade at Forex. You can start just having $100, gradually increasing trading volume by using your profit or bonuses, which you received from a broker, or you can engage in the trust management accounts and using investors’ funds for trading. You have infinite possibilities.