What is Forex Basics

Forex Basics, the word Forex is used on the foreign exchange market, and it is called by various names Forex, FX, Spot FX, or sometimes called Spot.

The forex foreign exchange market is the largest financial market in the world, with trading volume in this huge market reaching more than 4 trillion dollars per day.

It is the largest when compared to other markets, as is the case in the New York Mercantile Exchange, where the volume of trading in it is 74 billion dollars per day. You can also know how big this market is if you know that it is equal to three times the total amount of trading in the stock markets and futures (gold, silver, and metals) You will then know the volume of trading in the foreign exchange market.

What is trading in the foreign exchange market?

The answer is very simple. Forex trading simply means buying or selling the currency of a country against the currency of another country, and those currencies are traded through a broker (brokerage firms) or through a dealer, and it is traded in pairs, for example, if we say the euro and the US dollar (Euro/dollar) EUR / USD

Or the British pound and the Japanese yen we say (British pound / Japanese yen) or GBP / JPY

And because the relationship in that trading is not material in buying anything, there may be some kind of confusion.

How do I buy with a currency share in the economy of another country? When, for example, we buy the Japanese yen?

Answer: Yes. You are, in fact, buying a share in the Japanese economy, as the price of the currency in any country is a direct reflection of that country's economy in comparison to other economies of other countries in other currencies.

Quite the opposite of other financial markets, for example, the New York Stock Exchange depends mainly on location and centralization of exchange.

As for the forex market, it does not depend on the location or the centralization of the exchange in a particular country. This is due to the fact that the forex market is run entirely electronically within a network of international banks in various parts of the world and therefore it works continuously 24 hours a day.

Until the end of the 1990s, the forex market was an arena for adults only from banks and major financial institutions, as a prerequisite for entering this market was to trade with a value of about 10 to 50 million dollars as a start to trading in this huge market.

But now, with the advent of the Internet and linking major banks with each other in the shortest possible time, this helped spread the forex more and became accessible to everyone, so with the least potential you can trade in this huge market.

Why trade in the forex market? What are the advantages of that market?

The forex foreign exchange market contains many, many features not available in any other commercial market, including:

No commissions on trading

As trading in the forex market takes place without any additional commissions on the trader, no clearance fees, and government fees except for fees for the brokerage company that provides its services to the client, and those fees are represented in the (spread) the difference in the purchase price from the selling price only.

There is no size limit for the transaction

In futures markets, it is the size of the contract that determines the size of the exchanges. There is a standard in the size of futures contracts, for example for silver is 5000 ounces. In Forex, you specify the size of the deal yourself and will not impose a specific size on you even if your account is a small size, for example, $ 250.

Lower transaction costs

The transaction cost is very low, or the bid / ask spread, as it starts from 0.1 percent.

The market operates 24 hours a day

There is no waiting for the market to open with the bell - the forex market runs from Sunday evening to Friday afternoon EST, and the foreign exchange market sleeps.

This is great for those who want to trade on a part-time basis because you can choose the time that suits you when you want to trade in the morning. At noon. night.

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