Forex stands for Foreign Exchange and is sometimes called FX or 4X. It is a market where traders buy and sell foreign currencies. Moreover, it is the biggest market in the world.
The “Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets in 2019” found that the global daily trading volume of the forex market is over 6.6 trillion United States dollars (USD). To put in perspective, the daily trading volume on the Tokyo Stock Exchange; in 2021, was 3.8 trillion Japanese Yen, which at the exchange rate of (USDJPY: 130), it is roughly USD30 billion, which 0.04% of forex trading volume.
In the forex market, you exchange one currency for another currency (known as pair), and banks quote the price of one currency against another. It means that any time you buy one currency, simultaneously, you sell another. For example, the EURUSD is pair that represents the price of one Euro against the United States Dollar (USD).
Forex Market Participants
Forex market participants are governments, entities, and individuals.
Governments enter the forex market, selling and buying foreign currencies to manage the money supply and influence the economy.
Businesses participate in this market for international transactions and trading. A business that imports goods from abroad need to pay for imported goods in another currency (mostly in USD) other than the domestic currency. To buy a foreign currency, it needs to enter the forex market.
Individuals join the FX market to trade and profit from volatilities, and we call them retail traders.
Most financial asset traders first join the forex market due to the easy accessibility and then switch to other markets.
How Much Capital Do You Need to Trade Forex?
To trade Forex, you can start from even 10$.
You can find the minimum deposit requirement on your broker’s website, and the range could be from $1 to $10,000s.
To start trading, you need a forex broker account that provides services to the citizens of your country. Due to prevailing regulations in those countries or the money laundry prevention policy of the country where the broker is based, they do not accept customers from some countries.
When the Forex Market Is Open?
The forex market is open from Monday to Friday 24 hours.
It means you can place trade 24 hours during weekdays, from anywhere in the world.
What Do You Need to Learn to Start Forex Trading?
Knowledge is an asset that more is less. Any knowledge can help you to become a forex trader.
However, in my opinion, to become a winning trader, you need to learn and experience at least the following things.
- Using computer and trading platforms;
- Understanding how to control your thought and emotions;
- Economics (at least how the economy works); and
- Technical Analysis;
Finally, I would like to stress that everything you read on this website is for educational purposes only. Nothing is guaranteed. In fact, over 75% of retail traders lose money. So try to learn as much as you can to be part of the winning traders.