In this new sponsored series from Train 1 on 1, we are going to be discussing the basics of Forex or currency trading.
Welcome to a new series on trading forex from Train 1 on 1 on Rouges Magazine. In this series, we’ll be talking about forex, how to trade forex, and how investing your hard-earned dollars in the forex markets can bring you great returns. This series is in line with our goal of making sure our customers are the best-educated investors in the marketplace. If you like this article, you can learn more about Train 1 on 1 below!
What is Forex?
“Forex” is the short-term for the words foreign currency and exchange. The Forex market is quite simply, the exchange or buying and selling of currencies of different countries. This type of thing can be done for a variety of reasons but in the last decade, more investors have been looking to the forex markets not just to get new money for their next vacation but as an investment opportunity. In a world of international trade and travel, currencies are being traded constantly as businesses and individuals need to make transactions in the local currency.
Forex markets do not trade through a central exchange. They happen between traders in real-time. Forex markets are open 5 1/2 days a week and because most major currencies are traded, the market runs 24/7 with prices moving regularly. Commercial banks tend to be the largest traders, on behalf of their clients but there are plenty of opportunities for individuals to make money on the market movements within forex.
Unlike stock markets, forex is fairly new as an investment. Although the trading of currencies is as old as money itself, the modern forex market sprung up after the collapse of the Bretton Woods agreement in 1971 where currencies were allowed to free float against one another. As each currency carries a different amount of value, the price of their exchange can fluctuate based on the buying power of a given currency within a pair at any given moment. This process of exchange caused the need for foreign exchange services and trading which is where the modern forex market began in earnest. Thanks to online investment platforms, these markets are now available to the retail investor.
Spots, Forwards, and Futures
While institutions tend to trade mostly in forwards and futures, individual investors tend to trade what are called “spots.” This means that the trade takes place at the current price, right now. While Forwards and Futures are meant to secure a price for a given currency at a determined price in the future. Although the Futures and Forwards market used to be the largest market within Forex, the spot market is now the largest market due to its popularity among individual investors who are willing to trade at current prices.
The prices in the spot market are determined by supply and demand. These prices are based on many things, including current central bank interest rates, national economic performance, sentiment towards ongoing political situations, as well as the possibility of future performance of one currency in a given pair. There is also the potential to make money off the interest differential between two currencies but the way most people make money in forex is by trading the differences between the currencies in the spot market.
Should You Trade Forex?
Trading Forex does have some pros and cons. The Pros are that the markets are open for far more hours than the stock market and the market is extremely liquid which means you can enter and exit the market quickly when making trades. Trading forex requires the understanding of leverage and it requires the understanding of economic fundamentals at a macro level, this can be a challenge for new investors in the marketplace. However, there is an opportunity for the small investor trading in the spot market on a cash basis. Picking the right platform and the right education is key to trading success.
Train 1 on 1
This special series is brought to you by Train 1 on 1. Train 1 on 1 offers expert, 1 on 1 training with each new investor who comes onto the platform. Rather than leaving you with confusing candle-stick charts and economic data, Train 1 on 1 has brought in expert traders who have been trading in the forex markets for years to teach you how to trade forex and make plenty of money. Train 1 on 1 is more than a platform, it is an education center. Investors who trade with Train 1 on 1 have far more success than the competition. The reason is simple: education, one-on-one with an expert trader. Learn more about trading forex with Train 1 on 1.