What is Forex Trading?

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The foreign exchange (also known as FX or forex) market is a global marketplace for exchanging national currencies..

The global foreign exchange market is one of the fastest, most liquid and exciting markets

Global FT Market, a Global forex broker, offering over 60+ fx pairs in all the major currencies 24 hours a day, 5 days a week.

Our mission is to provide seamless forex trading experiences via the latest technology with the Meta trader 4, Web trading and mobile trading platforms.

Trading forex involves buying one currency and selling another simultaneously Forex, or foreign exchange, can be explained as a network of buyers and sellers, who transfer currency between each other at an agreed price. It is the means by which individuals, companies and central banks convert one currency into another – if you have ever travelled abroad, then it is likely you have made a forex transaction.

These are the 4 major trading session

1

SYDNEY

08:00 pm to 05:00am

(GMT+1)

2

TOKYO

12:00 am to 09:00 am

(GMT+1)

3

LONDON

08:00 am to 04:00 pm

(GMT+1)

4

NEWYORK

01:00 pm to 10:00 pm

(GMT+1)

Australia, the US and UK, shift to/from daylight savings time in October/November and March/April. So, plan your trades accordingly.

Once you know when to trade, the next step is to learn the jargon. So, here are some terms and concepts you will come across in the market.

How do currency markets work?

Unlike shares or commodities, forex trading does not take place on exchanges but directly between two parties, in an over-the-counter (OTC) market. Forex trading is decentralized and trading can take place 24 hours per day. There are 4 main trading sessions, namely Sydney, London, New York and Tokyo.  The forex market is run by a global network of banks, spread across four major forex trading centres

There are three different types of forex market:
  • Spot forex market: the physical exchange of a currency pair, which takes place at the exact point the trade is settled – ie ‘on the spot’ – or within a short period of time
  • Forward forex market: a contract is agreed to buy or sell a set amount of a currency at a specified price, to be settled at a set date in the future or within a range of future dates
  • Future forex market: a contract is agreed to buy or sell a set amount of a given currency at a set price and date in the future. Unlike forwards, a futures contract is legally binding

What is a base and quote currency?

Currencies are denoted in 3lettered ISO codes. Examples of how major currencies are denoted are USD (US dollar), AUD (Australian dollar), EUR (Euro), JPY (yen) and GBP (British Pound).

Currencies are denoted in 3lettered ISO codes. Examples of how major currencies are denoted are USD (US dollar), AUD (Australian dollar), EUR (Euro), JPY (yen) and GBP (British Pound).

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For instance, say the EUR/USD is trading at 1.1086. This means to buy 1 unit of Euro, you will need $1.1096 US dollars.

So in the example above, GBP is the base currency and USD is the quote currency. If GBP/USD is trading at 1.35361, then one pound is worth 1.35361 dollars.

If the pound rises against the dollar, then a single pound will be worth more dollars and the pair’s price will increase. If it drops, the pair’s price will decrease. So if you think that the base currency in a pair is likely to strengthen against the quote currency, you can buy the pair (going long). If you think it will weaken, you can sell the pair (going short).

What are the currency pairs categories we have in forex?
  • Major pairs: Seven currencies that make up 80% of global forex trading. Includes EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD and AUD/USD
  • Minor pairs: Less frequently traded, these often feature major currencies against each other instead of the US dollar. Includes: EUR/GBP, EUR/CHF, GBP/JPY
  • Exotics: A major currency against one from a small or emerging economy. Includes: USD/PLN (US dollar vs Polish zloty) , GBP/MXN (Sterling vs Mexican peso), EUR/CZK
  • Regional pairs: Pairs classified by region – such as Scandinavia or Australasia. Includes: EUR/NOK (Euro vs Norwegian krona), AUD/NZD (Australian dollar vs New Zealand dollar), AUD/SGD
What moves the forex market?
  • Central banks
  • News reports
  • Market sentiment
  • Economic data
  • Politics