Forex trading is one of the most interesting markets in the financial sector. Also known as Forex or FX.
It is a market independent of countries or borders and is traded 24/7, not in any time zone. Forex, a market where currencies are constantly exchanged, is traded according to the values of foreign exchange types.
Because of its immense scale and 24/7 availability, forex offers intrepid traders plenty of opportunities to gain profits from either one-off or longer-term fluctuations in exchange rates. It simultaneously calls for deep knowledge of how currencies interrelate globally.
Whether you are a beginner or a professional trader, you will get a good overview of the basics of trading in this detailed forex guide.
Let's take a look at the must-know topics for forex traders.
What is the Global Role of Forex Trading in the Market?
The forex market exists to facilitate global exchange and investment. If businesses and people want to swap currencies between one currency and another for global business deals or investments, they use the forex market to exchange their currency.
Although used by small investors, FX exchanges can also be preferred for large-scale individual and institutional investments.
Further, multinationals use forex to cover the currency risk on exports and imports. The world’s interdependent economy simply couldn’t work without a viable exchange currency.
Forex is that place, it’s one of the major parts of the world economy. It varies according to the value of the currencies and the amount of trading preferences.
Forex traders can work individually or manage trading processes affiliated with an institution.
Who Trades in Forex?
Although central banks and large enterprises make up most of the volume in forex, the market is becoming more accessible to individual traders.
BlueSuisse has found that the majority of forex traders come in three categories:
Institutional Investors: Banks, hedge funds, pension funds, and other institutional forex investors use currencies to hedge their portfolios. They account for the largest overall trade volume.
Commercial Merchants: Foreign businesses such as exporters and importers utilize forex to reduce the currency risk in cross-border payments and trades. They typically make larger deals.
Retail Traders: Retail traders are individuals who are private traders or investors who speculate and invest currencies from their own accounts. With technology having significantly decreased barriers to entry, more people could participate in money markets on platforms such as the ones provided by BlueSuisse.
As we mentioned at the beginning, traders can take action for their own investments, as well as perform trading processes in connection with an institution or financial resource.
Large companies usually prefer to work with a professional forex trader to manage their financial trading.
What are the Forex Trading Hours?
For forex, there is no centralized trading, unlike in the case of stocks and commodities. It’s an OTC market that works throughout the world and across different time zones.
Therefore, it operates 24 hours a day, from Sunday evening to Friday afternoon in most major financial centres of the world. But trading naturally shifts according to local business hours.
The forex market is typically in full swing during the weekday trading hours in major financial centres such as London, New York and Tokyo. Currency pairs trading on the US dollar (eg EUR/USD, USD/JPY) experience their highest levels of volatility during the US trading hours (8 AM to 5 PM Eastern Time). yen-based crosses such as EUR/JPY, on the other hand, get active when both Europe and Asia are trading. The water thins out at night when some areas are closed.
Best Online Platforms for Forex Trading
Since the Forex market is a 24/7 market, traders need to have an online account that allows them to constantly monitor their assets. For traders to trade on the forex market, they require an online trading platform and a live trading account.
Focusing on Forex trading and tips, BlueSuisse offers all the information that beginners and professional traders need. BlueSuisse provides innovative trading tools like MetaTrader 4/5 and TradeMaster that deliver live market data, order execution, charts, technical indicators and many other features for trading pairs of currencies.
MetaTrader 5, the most up-to-date version of the MetaTrader series, is frequently preferred in the forex trading environment with its user-friendly interface and mobile accessibility.
For a professional forex trading experience, you can control your accounts and make easy and fast transactions via the MetaTrader 5 platform.
BlueSuisse also offers courses and personal mentoring for aspiring traders. There is no extra software beyond a common internet browser to connect to trading platforms on your desktop or mobile devices.
Apart from a platform, forex traders use other instruments for fundamental and technical analysis. The economic calendars allow you to stay ahead of news releases that trigger volatility.
Currency charts make it possible to depict trends and cycles. Forex platforms offer leverage to possibly boost profits, but it also puts you at greater risk.
It’s also up to traders to decide whether to speculate on the value of the currency using spot trades or cover the currency risk with forward contracts. Creating a strong forex trading strategy also requires good risk management, so you should definitely consider the current market conditions of the currencies you want to trade.
Information Every Forex Trader Must Know
Since Forex trading is a market that is never stable and is constantly changing, the current status of currencies must be followed at regular intervals.
Before jumping into live forex trading, new traders should learn some fundamental market concepts:
- Major currency pairs: The most liquid and most widely viewed pairs are EUR/USD, USD/JPY, GBP/USD, USD/CHF, and AUD/USD. They account for more than 80 % of daily forex trading.
- Minor currency pairs and exotic currency pairs: Lower liquid pairs of currencies such as the Canadian dollar, New Zealand dollar, and emerging market currencies.
- Pips and lots: Pips represent the smallest change of price in a currency pair. The default lot sizes are 100,000 base currencies.
- Leverage: Margin trading enables you to leverage small positions, but you also get more losses if trades swing against your position.
- Types of orders: Traders can get into the market using market, limit, stop, and other advanced order types for versatility.
- Analytical fundamentals: Monetary metrics (GDP, inflation, interest rates) affect currencies.
- Technical analysis: Chart research such as trend, resistance, and indicators help to identify trades.
BlueSuisse has educational materials that new traders can access to ensure that they have a solid foundation to trade with real money. You can also use a demo account to forex trade on paper and get experience at no risk.
What to Pay Attention to When Investing in Forex Trading?
For forex beginners, following a few basic guidelines will allow you to learn as much as possible and reduce your risk:
- Take it easy: Trade micro-lots with low leverage on a demo account and test your luck on real funds. Manage risk through stop-losses.
- Small cap: Focus on 1 or 2 highly liquid majors like EUR/USD instead of spreading money around too much.
- Learn technicals: While fundamentals cause volatility, technical analysis allows traders to spot possible trading opportunities on charts.
- Emotion management: The forex market is a hotbed of risk. Do not chase down losses or watch big stories for hours on end. Remain disciplined.
- Resources: Register for webinars at BlueSuisse and gain expertise from experienced traders.
- Be patient: Hitting the ground running rarely makes any sense in this competitive marketplace. Steer clear of low probability setups and scalp the trend where possible.
Investing in forex can be a profitable and exciting venture for novice traders if you’re educated, risk-adjusted, and long-term.
BlueSuisse believes in providing traders with the knowledge and tools to thrive. If you want to become a professional forex trader, you can attend training, learn how to analyze the market and create your online demo account immediately.
Why Choose Forex Trading?
Forex offers a few advantages to traders looking for a global marketplace that has 24/7 liquidity. Its size alone also ensures that currencies are constantly in flux, and causes price fluctuations for both short-term and long-term traders.
And there are often very low trading fees on brokers such as those offered by BlueSuisse.
With access to economic data, exchange rates, technical indicators, etc, being continuously in vogue, forex traders can search for potential trades in various forms. The ability to buy or sell any currency pair further increases strategy possibilities.
Forex offers incredible variety and flexibility when it comes to trading, provided that investors take the time to learn.
For those who wish to get hands-on experience with a high-end financial market and dive into trading full-time, forex can be an extremely worthwhile venture.
Forex trading stands out as both an enjoyable and very profitable market. BlueSuisse brings together account types for both beginner and professional traders.
Create your account for free with BlueSuisse now and discover the world of forex!