What's Forex Trading: Market? - Where to Trade FX and How to Start FX Trading

A beginner trader wanting to learn about the online forex market can use this learn tutorials to learn about: What is the forex? and how to start trading forex using a platform software like the MT4 or MT5 platform.

Many traders are starting to ask around about what is fx trading? - Where to Trade, How to Start, - the most common questions that most new traders ask are:

• What is FX?
• Where to Trade FX?
• What is a Software Platform?
• How to Start?
• What is a Trade System?

Most of these questions are discussed in other topics, but the basic question is What is Forex?

The forex is an international online market where 7.2 trillion dollars is traded everyday.

The forex market was established in 1971, when the floating exchange rates system was introduced. The is not centralized, unlike the stocks.

Currency trading is done through interbank connections through banks which are known as liquidity providers and forex brokers that connect individual traders to this interbank network. Trading therefore occurs over computer and telephone networks at thousands of locations worldwide.

This makes the forex a decentralized market formed by a large network of banks collectively known as the interbank market. These banks determine the exchange rates, based on the supply and demand for the currencies.

This market is commonly referred to as FOREX, FX or Spot FX and this is where banks, companies, investors & speculators exchange one currency for another either for the purpose of facilitating international trade or profiting from the exchange rate difference.

The currencies traded are named using 3 alphabetic symbols, the first 2 represent the name of the country while the third symbol represents the first letter/initial of the currency.

The Forex is the largest financial market in the world and 7.2 trillion dollars is traded every day, compared to US stocks that trades 0.5 trillion dollars. FX trading is opened 24 hours a day because it is an interbank market whereby if banking centers in the USA are closed those in Europe are open, and when these are not opened those in Asia are opened. The typical trading day starts in Sydney, then Tokyo , then London and finishes with the New York session.

In the FX, 95% of all trades is done for the purpose of speculation for profit, the rest is traded for the purpose of settling international trades between countries. This is made possible because FX is an over the counter interbank market, that can facilitate trade transactions between many traders through online brokers.

FX is based on the concept of floating currencies in the open exchange market, in what is called the international money market where the participants are Banks, Brokerages, Fund Managers, Governments, Central Banks and individual speculators. The value of Forex currencies is determined by demand supply forces and a country monetary policy. Other factors that affect currency value is political stability of a country.

Forex trading for speculators

Until recently, Forex was only available to professional traders from major and international commercial banks, investment banks, money managers, registered dealers, international money brokers & large multinational corporations. Now that FX is available online traders want to know What is FX Trade?

But with the emergence of internet and online brokers, speculators & retail traders can now participate in the forex market, through retail FX brokers.

These days with the presence of Desktop computers and easy access to internet everywhere, online fx trading has become very popular. There are so many Online brokers available on the inter-net.

Traditionally Forex was only available to only the rich who had capital of more than $1 million. However with the growth of internet online brokers are now able to provide retail accounts that can be opened with as little as $100 and traders can trade currencies over the internet.

A trader only needs to download a brokers online trading software then open an account with the broker and then start to trade currencies online through the broker.

FX Trading - How to Start

Currency exchange is not centralized like the futures market or the stock exchange markets. Currency trades occurs over multiple computers and telephones at thousands of locations worldwide, through inter-network of banks known as interbank network.

Forex trades are placed from Online Platforms like the one below.

The forex market is where banks, investors, speculators and other participants, exchange one currency for another. The largest transaction activity in currency trading is between the five major currencies:

• US Dollar
• British Pound
• Japanese Yen
• Euro and
• Swiss Franc

FX, is also the largest financial market worldwide. In comparison to USA stocks which trades $700 billion per day the trades up to $7.2 trillion in a single day.

Forex is open 24 hours a day and currencies are exchanged in the Inter-bank market. The market follows the clock around the world, trading moves from the major banking centers in the United States of America to those in Australia & New Zealand then to those in Asia, then to Europe and the back again to those in the Unites States.

Until now, only professional traders from the major international commercial/investment banks used to dominate the forex market. Other participants who have now joined in range from large multinational corporations, registered dealers, international money brokers, global money managers, futures trader, options traders, retail traders and private speculators.

There are 3 main reasons to participate in the forex market

1. One is to facilitate an actual transactions, where the international corporations convert and cash in profits made in foreign currencies into their local domestic currency.
2. Corporate treasurers & money managers also trade forex so as to hedge against unwanted exposure to future price action movements in the currency exchange market.
3. The third and most popular reason is based on speculation for profit. In fact, it is estimated that less than 5% of the total trade transaction activities on the forex is what actually facilitates commercial transaction, the other 95% is speculation based transactions retail forex trading.

FX is considered to be an Over the Counter (OTC) or 'Inter-bank' market, based on the fact that trade transactions are conducted between two counter-parties over an electronic network.

Global Forex Trading Hours

Forex market is not centralized within any exchange center, as the case with stocks and futures markets. FX is a true 24 hour market, where the trading day begins in Sydney, then to Tokyo, London then New York, all around the globe. When it comes to the global fx trading, traders can respond to currency exchange rate fluctuations caused by economic, social & political events at the time they occur, day or night.

How to Setup Beginner Guides

1. How to Setup MetaTrader 4 Software
2. How to Open Practice Demo Account
3. How to Login to MT4 Platform
4. How to Open a Chart
5. How to Open Buy and Sell Trade

What's FOREX?

FX, FOREX is short for Foreign Exchange market. The best way to understand what is FOREX is to think of it as buying and selling money. This is done through the international FX market.

Participants of FX trading buy a particular currency and sell it when it is favorable to do so. Your best chance as a learning beginner trader is to understand analyze the trends so you can pick and trade a trending currency pair, whether it is the Euro Dollar, the Euro Japanese Yen, or another currency pair.

Practice Trading on Demo Practice Account

Because there is real cash involved in forex trading, it's logical that many people are hesitant to join in. The good news is that there are a number of ways to practice without investing real money. You should read up on various trade techniques such as practice demo accounts and thoroughly do your homework. When you are ready, download a software and give it a try.

During the demo practice period, you can use virtual money(like monopoly game money) to trade currencies. You can use this time to better understand FX market and how to use the fx platform software and technical analysis tools. There are many web resources that you can find that offer information on the forex market and how you can analyze the information and predict changes in currency prices. Once you have a good trading system & a reliable forex trading plan that you use and it is profitable on a demo account you can then try to trade with real money.

What's the Risk?

As with any financial investment, there are risks. Even if you research vast wide trade techniques, study trends, and learn how to predict changes in the trend, things can still go wrong. The best advice here is to use your head and better judgment, and most importantly use money management rules. Many people will see the power of leveraged trading within a few hours & then get greedy and go in over their heads and take risks & then lose their investment because they do not have an investment strategy or a fx trading plan. As a beginner trader, you will have to learn when to trade and when not to trade. Many traders become too greedy and overtrade or hold on to a losing trade position for too long.

You can use a stop loss order to exercise better control of your forex trade activities and limit your losses and risks to the downside. You can set up automatic stop orders & the platform software that will close an open trade when this target is hit. This also goes both ways: you can set an upper limit to take profit and a lower limit to stop losses.

How to Start

Where to Trade Forex? - The most popular way to trade the online FX market is to do it online from your home PC computer or office Desktop PC computer or Lap Top computer which has a trading software and a fast inter-net connection - or from your Mobile phone through FX Trading Apps. This way you will have greater control and access to your investments via this software platform or mobile app and you can make changes or adjustments any time of the day or night. Online currency trade platforms and apps have become a great way of taking part in the online FX market, so you will not find it hard to find trading platforms, trading apps or currency brokers online.

Always test the platform software using a demo account to make sure that you are comfortable with it.