An Introductory Guide to Forex Trading

Short for the foreign exchange market, Forex is a market which allows for the trading of currencies on a global level. If you don’t know much about Forex but are interested in getting started, here are some of the key things you need to know when it comes to Forex trading:

A History of Forex Trading

Forex trading really began in the 1970s, though electronic transactions didn’t become widespread until the 1990s. In 1976, floating foreign exchanges became global accepted. This meant that currency rates were no longer tied to the gold standard or based on the fixed U.S. dollar standard established by the Bretton Woods System in 1944. Floating exchange rates means currencies can gain or lose value in response to market mechanisms. As a trader, you can buy and sell currency and gold to profit from these fluctuations.

How Does Forex Trading Work?

The Forex market is not a regulated exchange and is not controlled by a central governing body. You participate in the Forex market by buying a quantity of one currency with funds from another currency. You can constantly buy and sell currencies, profiting off advantageous rises or falls. You never have to physically possess the currency or gold, but simply trade it electronically and reap the benefits. When you trade gold on the Forex market, there is potential to earn huge profits very quickly. The Forex market is where governments, banks, businesses, and traders exchange currencies – and you can too.

What are the Advantages?

Forex trading is open 24-hours per day on weekdays, meaning no matter your schedule or location, you can be actively trading and profiting from currency exchange. It is an extremely liquid market with trillions of daily transactions. As a result, you can trade in very large quantities and buy and sell quite quickly, and thus have increased potential to make huge profits. As mentioned above, you never physical need to possess the currency or gold, which saves time and transportation and storage costs. Forex trading is accessible to anyone and quite easy to start. Finally, you can use advanced trading strategies and leverage techniques to really take advantage of the Forex market.

What are the Risks?

Anytime there is potential for great reward, you must also understand there are associated risks. Trade inherently requires speculation, and it is possible your predictions do not pan out. Technical errors which result in a loss are also possible, which is why you should only use reliable online Forex trading platforms.

Now you know about the history, function, advantages, and risk of gold trading on the Forex market. Are you ready to get started?

About The Author

Scroll to Top