Forex Trading, or otherwise known as currency trading, is a decentralized global market the world’s currencies are being traded. The forex market is one of the largest and most liquid financial markets in the world, chruning an average daily trading volume of US5 trillion.
To put things into perspective; combining all the volume of the stock markets around the world, it would still fall short of the volume of the forex market.
But what does this mean to you and I?
It means opportunities. Tons of opportunities each day. With such volatility, forex trading offers traders tons of opportunities each day.
What is Forex Trading?
Suppose you booked a holiday to Singapore where you will need Singapore dollars to exchange for goods and services while you are visiting Singapore.
You head over to a money changer and convert your US dollars to Singapore dollars. That is essentially what Forex Trading is; the exchange of one currency for another based on the prevailing forex rates.
And because forex rates are based on the laws of supply and demand, the rates fluctuate. This creates opportunities for you to speculate and take a position.
How Forex Trading Works
Earlier on, we established that trading forex involves the exchange of one currency with another. When it comes to Forex trading, traders try to profit by speculating on the direction of the currencies and take a position in accordance with their bias.
While it sounds simple to profit from trading, it really isn’t. If you are looking to get started with trading, then make sure to grab a copy of our free day trading guide here.