Fx/Forex

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What is forex?

Forex is short for foreign exchange (sometimes abbreviated to just FX) and is the global, decentralized trading market of the world’s currencies. Traders, investors, banks and exchanges buy, sell and speculate on these currencies, and in turn this activity determines the foreign exchange rate.

What are currency pairs?

Forex is all about speculating on the fluctuating currencies between two countries. These two currencies are referred to as ‘currency pairs’ and they’re made up of the base currency and the quote currency. The most traded currency pair of all is the Euro against the US Dollar, which is normally presented as EUR/USD.

 What is Forex Trading?

Forex trading as it relates to retail traders (like you and I) is the speculation on the price of one currency against another. For example, if you think the euro is going to rise against the U.S. dollar, you can buy the EURUSD currency pair low and then (hopefully) sell it at a higher price to make a profit. Of course, if you buy the euro against the dollar (EURUSD), and the U.S. dollar strengthens, you will then be in a losing position. So, it’s important to be aware of the risk involved in trading Forex, and not only the reward.

Why is the Forex market so popular?

Being a Forex trader offers the most amazing potential lifestyle of any profession in the world. It’s not easy to get there, but if you are determined and disciplined, you can make it happen. Here’s a quick list of skills you will need to reach your goals in the Forex market:

• Ability - to take a loss without becoming emotional
• Confidence - to believe in yourself and your trading strategy, and to have no fear
• Dedication - to becoming the best Forex trader you can be
• Discipline - to remain calm an unemotional in a realm of constant temptation (the market)
• Flexibility - to trade changing market conditions successfully
• Focus - to stay concentrated on your trading plan and to not stray off course
• Logic - to look at the market from an objective and straight forward perspective
• Organization - to forge and reinforce positive trading habits
• Patience - to wait for only the highest-probability trading strategies according to your plan
• Realism - to not think you are going to get rich quick and understand the reality of the market and trading
• Savvy - to take advantage of your trading edge when it arises and be aware of what is happening in the market at all times
• Self-control - to not over-trade and over-leverage your trading account

As traders, we can take advantage of the high leverage and volatility of the Forex market by learning and mastering and effective Forex trading strategy, building an effective trading plan around that strategy, and following it with ice-cold discipline. Money management is key here; leverage is a double-edged sword and can make you a lot of money fast or lose you a lot of money fast. The key to money management in Forex trading is to always know the exact dollar amount you have at risk before entering a trade and be TOTALLY OK with losing that amount of money, because any one trade could be a loser. More on money management later in the course.

How does forex trading work?

To  trade forex is to buy and sell currencies – with the aim of making a profit. Forex trading will always involve two currencies at a time, the base currency and the quote currency. The difference in price is where you’ll make your profit or loss.

Is forex trading risky?

Any kind of trading has its risks and that’s crucial to always keep in mind, but it can also create profits which is why so many people do it. Again, we can’t encourage you enough to start trading on a demo account if you’re new to forex trading. Once you’re ready for a live account, you should always fully consider the risks involved.

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What do forex brokers do?

Like all brokers, a forex broker acts as an agent helping traders access the interbank that conducts all forex trading. Alpari International is one of the most well-known forex brokers in the world. We provide different options tailored to the many different clients that we look after. Whatever your trading goals are, our range of accounts are designed to work with every objective. You can check out our different forex trading accounts here and if you’re only just starting, we suggest you open a demo account to start practicing how to trade without risking any real money.