white logo top guideline

What Is The FX Market? (Forex Market) Essential guideline for beginners

FX Market seems like a new word! Don’t worry. Today we will discuss (FX) Forex Market. From this post, you will know, what is FX market? Will you trade in the FX market? When to trade in the Forex market? How to start the FX market? Including various other things. So read the article carefully.

What is the FX Market?

Forex or FX – one of the largest global financial markets for short currency trading for foreign currency. Simply put, FX market means “foreign exchange market” which is also called “FX market”. The FX market is a system or market where foreign currency is traded or exchanged. It is basically a global market, where the currencies of different countries are being exchanged. It is the most traded market in the world with sales of approximately $ 5.1 trillion every day.

FX of Forex trading means Foreign Exchange which stands for Foreign Exchange Trading. In other words, the exchange of foreign currency in a simple language is considered forex trading. And where these transactions are done, it is called FX Market or Forex Market. 

FX has no actual location. Here buyers visit alternate currencies. It is a digital community of banks, agents, economic establishments and character traders (normally buying and selling via agents or banks).

Financial centres around the world – London, New York, Tokyo, Hong Kong, and Singapore – function as anchors of trading. between different buyers and sellers. To access the interbank currency market, you need to address a Forex broker. I hope you understand, What is the FX Market? Or What is the Forex Market?

COMMERCIAL BANKS

Private credit organizations that do most of the global currency trading through electronic networks

CENTRAL BANKS

Forex trendsetters that control the money supply in a given economy

TRADERS

Risk-taking individuals who come to the FX market to earn money fast

INVESTMENT FUNDS

High-skilled investors who have a broader selection of ivestment opportunities

CORPORATIONS

Active hedgers seeking
to protect their profit through
buying/selling currencies

What to trade in FX Market?

1. Currencies

Forex transactions involve two currencies, which form the so-called currency pair. For example, the EUR / USD pair shows the price of one euro in US dollars. There are different types of currency pairs. All major pairs include US dollars and are very popular with traders:

EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, etc.

Since these are the most traded pairs, they tend to be more dynamic and offer the best trading conditions. The cross includes two popular currencies, but does not include the US dollar. The most common crosses are the euro, yen and pound:

EUR/GBP, EUR/JPY, GBP/JPY, EUR/AUD, etc.

Exotic currency pairs consist of the main currency and a representative currency developing economies (Brazil, Mexico, Turkey, etc.) or small (Sweden, Norway, etc.). Exotics are very volatile pairs that offer both great returns and great risks.

Which pair to choose for trading?

If you are just learning to trade: choose some big pairs. You will receive a lot of insight into them and the start of your trading career will be smooth and fun.

Over time, diversify: add crosses and external pairs to your portfolio. This way you will be able to maximize your profits and reduce your risk.

2. CFD for Forex Market

We know the amount of oil in barrels and the amount of gold in the billions. However, you should understand that when you go to the oil market, you will not find real oil in a container.

So, what will you get? Considering oil, gold or stock trading, you will see three magical characters: CFD

CFD stands for “Contract for Difference”. It is a special type of contract that is based on the value of an underlying asset. This allows traders to benefit from the difference between the entry price and the exit price of a trade. In other words, you with CFD Get the opportunity to earn money by changing the price of gold/oil/stock without having to physically purchase these assets. Convenient, isn’t it?

3. Oil for the FX Market

Let’s start with oil, the world’s main fuel component. Brent and WTI are the two main oil benchmarks that you can trade on the fx market. Both resources continue to move in the same direction, but the actual price levels differ because these oil blends are produced in different regions of the world. The direction of the oil market depends on supply and demand.

    • Supply refers to the amount of oil produced in the world: As output increases, oil becomes cheaper. On the other hand, if production declines (for example, if producers decide to limit it or if some oil facilities go out of order), oil supplies become limited and prices rise.
    • Demand for oil is high when the world’s major economies show strong growth. Oil prices are rising during this period. In times of financial and economic crisis, by contrast, oil buyers experience difficulties and purchases decline. Low demand makes sellers lower product prices.

To predict market moves, you need to check the news and economic calendar.

4. Gold for the Forex Market

In MetaTrader, gold is denoted as XAU / USD. Gold is a traditionally safe investment. With the rise and fall of empires, new financial instruments come and go, but precious metals always remain.

When people want to save money, they buy gold. This rule has direct consequences for short-term trading:

    • In times of global uncertainty, gold prices continue to rise.
    • When traders are willing to take risks, gold prices fall.

If you want to capture the market sentiment, you need to check the news. So far we have What is the FX Market? And What to trade in FX Market? I found out about this. Now we will know what is the equity index of Forex market

5. Equity Index of Forex market

An equity index or a stock market Indices is used to describe the performance of a stock market or a specific part of it. For example, the S&P 500 shows how the stocks of large US companies are performing overall. Contains NASDAQ Information about large technology companies.

The better the business conditions in a country (lower interest rates, economic and political stability, etc.), the higher the stock indices will be. If you look at the long term charts, American stocks are always trending upwards and it looks like there is no ceiling!

Equity-indexes-graph.-fx-markey-graph.-forex-market-chat

When to trade in the forex market?

The fx market is open 5 days a week, 24 hours a day. Although currencies are traded 24 hours non-stop, market players differentiate trading sessions according to market opening times in a particular region of the world.

It is generally assumed that there are four trading sessions:

    • Australian
    • Asian
    • European
    • American

The exchange day begins in Australia and New Zealand, extends to Asia, continues to Europe, and finally reaches the United States and Canada. Transaction volumes are usually high at the intersections of these sessions.

Keep track of trading sessions as currency trading becomes more dynamic during this period.

trading sessions:

How to get start fx market

Easy to trade with FBS. All you need is a personal area and a trading platform.

FBS Mobile Private Area

Access all your complex personal data involved in the transaction and manage funds from anywhere in the world. Follow these simple steps:

You can also register at FBS website

  • Download the app.
  • Register an account. Choose the type of account that best suits you. The system will provide you with an account number and password. You need to enter this information into the trading software to start trading.
  • Check your email. There will be a registration letter. Follow the link in this letter to confirm your email address and complete the registration. To be able to withdraw money from your account, verify your profile.

Trading platforms

Trading software will give you access to live quotes from the world’s most wanted trading instruments. FBS gives you quite a bit of fantastic option.

MetaTrader

MetaTrader is the most popular trading platform. If you want to use 50 indicators and tools to analyze charts and get help from Expert Advisors (EA) then this should be your choice.

MetaTrader

You can register at meta trader website

  • MetaTrader 4 will be suitable for beginners who want to focus on the Forex market.
  • MetaTrader 5 is perfect for in-depth analysis and trading on a wide range of assets, for example, stocks.

FBS Trader

FBS Trader is a customized all-in-one trading platform app. It combines features such as:

You can register at FBS trader website

You can register at FBS trader website

  • The smart interface lets you edit your orders and account settings in just a few clicks.
  • Instant deposit and withdrawal through more than 100 payment systems.
  • The professional support team is answering your questions 24/7.

How to trade in forex market

Forex trading

Imagine that you think the euro will rise against the US dollar. You buy 100,000 EUR, paying 110,000 USD from your trading account (no matter the currency in your account).

Your prediction was correct and the price of EUR / USD actually rose to 1.1050. As a result, when you close your trade by selling 100,000 EUR, you will receive 110,500 USD, earning 500 USD.

Base currency /Quote currency EUR/USD 1/1.1000 1 Euro costs 1.10 US dollars

Forex trading

We have purposely used the figure of 100,000 EUR in this example. When trading in the financial markets using MetaTrader software you have the size of a specific position. In the example above, the size of a trade is 1 lot. A lot is a unit in trading. 1 lot equals 100,000 units of a base currency.

It is possible to trade less than 1 lot. The smallest possible trade size is known as “micro lot” and is equal to 1,000 units of base currency

1 lot = 100,000 units of base currency 1 mini lot = 10,000 units of base currency 1 micro lot = 1,000 units of base currency

Still, even a solid amount of 1,000 EUR or 1,000 USD. Does this mean that money is needed to open a trade? The answer is no, you can start trading like 1 USD. How does it work?

The answer lies in the so-called “leverage”. A broker pays you more than your account balance by using leverage. If you have a 1: 100 leverage, a broker will enable you to borrow 100 USD for every dollar in your account. In other words, if you have 1,000 USD in your account and 1: 100 leverage, you can enter trading positions with values ​​up to 100,000 USD.

You can set the leverage size when you open a trade account. Leverage increases your potential profit, but it also magnifies your loss if the market goes against you. For beginners, the leverage of 1:100 is usually recommended.

The amount you need to have in your account to open a leveraged trade is known as “margin”. In the example we just described, 1000 USD is the margin for a position of 100,000 USD

If you have 1,000 USD in your account, a profit of 500 USD means you have earned 50% of your account value in this trade.

How much will a trade cost?

A pip is the smallest change that can make an exchange rate. A pip for EUR / USD is the fourth decimal place – 0.0001; For currency pairs with Japanese Yen like USD / JPY, it is the second decimal place (0.01).

In the picture above, you can see that two estimates are shown for EUR / USD. The lowest price is what you can sell a pair. This is known as the “bid price”. This is the price displayed on the graph. The higher “Ask” price is what you can buy a pair.

The difference between these two prices is called a “spread”. Spreads are commissions paid to brokers for each transaction. It works like a bank exchange. That is, once banks and brokers have access to the market, they sell at low prices and buy at high prices so that they can earn spread returns.

How much will a trade cost?

The more popular a currency pair, the lower the spread. For example, spreads on EUR / USD transactions are usually very small or, as traders say, tight. Spreads are given in pips, so traders can easily calculate the cost of any transaction by multiplying the pip spread by the value of 1 pip.

The value of 1 pip depends on your trade size in lots.

If you open a 1 lot trade in EUR/USD, 1 pip the price moves in your favour will bring you 0.0001 multiplied by 100,000 or 10 USD. The smaller the trade size in lots, the smaller profit you will get for 1 pip. Pip values are fixed if USD is listed second in a pair and you have an account funded with US dollars. For other cases, you will need to modify the formula by adding the quote for the appropriate currency.

Conclusion

WSo far we have discussed “What is FX Market?” Will you trade in FX market? When to trade in the Forex market? How to start FX market? How to trade in the Forex market? How much will it cost to trade? These things. I hope you understand these topics.

If you are still new to the (Forex market) FX market and want answers to some more basic questions, or have not yet got the full idea. However, you can ask your question in the comments section below. Our team will try to answer your question.

You may like it;

Related Guideline

মেগার কি কত প্রকার মেগারের গঠন ও কার্যপ্রণালী

মেগার কি? কত প্রকার? মেগারের গঠন ও কার্যপ্রণালী

আমরা যে সকল বিষয়ে আলোচনা করব তা হল:-  মেগার কি? কাকে বলে? মেগার কত প্রকার ও কি কি? মেগারের গঠন ও কার্যপ্রণালী। মেগারের ব্যবহার। মেগার ভালো না খারাপ তা কিভাবে পরিক্ষা করা হয়? কিভাবে মেগার দ্বারা উচ্চ রেজিস্ট্যান্স পরিমাপ করতে হয়? ইত্যাদি বিষয়।

Full Guideline »

Leave a Reply

Your email address will not be published.

Enable Notifications    OK No thanks