Beginner’s Guide to Forex Trading

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Take the two words “foreign” and “exchange”, squeeze them together and you have forex; foreign currency exchange is big business and for many traders, this is a market they understand; major fiat currencies can be bought and sold and making a profit on transactions is the order of the day.

beginners guide to forex trading

A market that never closes

The Forex market is open most of the time, 24 hours a day, five and a half days per week, which means you can trade at any time. The market is decentralised, there is no Forex central organisation, rather the system is a network of secure servers that encompass the globe. Cyber-security is top-notch, so you don’t have to worry when trading.

Traditional Forex traders

Until a few years ago, the main investors in the Forex market were large banks, hedge funds and multinational corporations, yet thanks to digital tech, anyone can trade on a secure online platform. Take the top platform called Metatrader 5, which is one of the most popular Forex trading platforms with many powerful features including an enhanced programming language and access to huge libraries and a whole host of resources.

The spot market

This is the arena where you can trade currencies in real time and the price is based on supply and demand. The trading price is determined by numerous factors, including:

  • Current interest rates
  • Economic performance
  • Geopolitical movements
  • Price speculation

Trading is usually done in pairs; you might buy US dollars and pay with GPB sterling and when an agreement is reached, the real-time transaction is set in motion and it takes 48 hours for such a transaction to be completed.

Futures & forward trading

Some traders prefer to predict the price of currencies and a forward trade is a private arrangement between two parties to buy a currency at a specific time in the future. A futures trade is a standardised contract to take delivery of an amount of specific currency at a specified date. To learn more about futures contracts, search the web for additional information and prior to making any trades, make sure that you fully understand the marketplace.

Speculation

Basically, you can speculate on the price of a currency at any time; there are many variables that might impact the value of a currency, such as economic movement, geopolitical context and good old supply and demand.

Setting up a brokerage account

There are top-rated online Forex brokerages that you can connect with and we recommend that you join forces with such a platform in order to trade. A brokerage makes money for its clients, so they want you to be successful, plus they have many powerful features to help you pick the right trades.

So, there you have it, an introduction into the ins and outs of Forex trading, which we hope helps you become a successful trader.

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