Education

Hi! This Iffi Malik to teach you how to trade in forex? Today we’ll  discuss the essentials of forex trading, including how the market works, key terminology, strategies, and tips for success. This looks interesting!!!!! Understanding the Trade in Forex Market Now, first of all we are going to recall  the basics of forex trading. Currency Pairs is the most important concept in forex trading. In trading the currency pairs means exchanging one currency for another.  For instance, in the EUR/USD  the base currency pair is EUR, while the quotation currency is USD.An exchange rate shows the amount of the base currency that must be purchased with one unit of the quoted currency. For example, if the rate between EUR and USD is 1.2000, then 1 EUR is equivalent to 1.2000 USD. Market Participants Now, let’s explore the market participants and traders in forex trading. Retail traders and Individual traders that use brokers to trade.Financial institutions such as banks engage in extensive foreign exchange trading.Through monetary policies and interventions of Governments and central banks,  they have an impact on the value of currencies.Companies trade foreign exchange to protect themselves from exchange rate risk or to pay for products and services in various currencies. How to Begin Trading in Forex Now, let’s discuss the step by step process to begin a forex trading exchange. Step1. Education and Research In forex trading knowledge of the trading is the most important thing to survive the new traders. For this purpose step 1 should be of the trader’s education and market research related to trade in forex .  Forex Education is important to familiarize yourself with the basics of forex trading before you begin. You may learn both the fundamentals and more complex ideas with the aid of several “books, classes, and internet resources”.Market research is important to keep up to date about developments, news, and analysis in the global economy that may have an influence on currency rates. Step 2. Choosing a Broker After getting the information related to forex trading the next step is to find the broker because a broker is the tool to trade in the market. Verify that the broker is subject to regulation from a respectable body, such as the US Commodity Futures Trading Commission (CFTC) or the UK Financial Conduct Authority (FCA).After selecting a broker who provides an easy-to-use trading platform with all the tools and features you need for trading and analysis.However, in this procedure expenses are to take into account, broker’s commissions, spreads, and other costs. Step 3. Opening a Trading Account This is the interesting and technical part of trading because this is the turning point of your practical life.   Interesting part of it: The majority of brokers let you practice trading with virtual money through demo accounts.  Great!!! This is an excellent method to practice trading without risking real money while becoming acquainted with the platform.After using the demo account you will be able to use the live account. Then you can start a live trading account as soon as you’re comfortable doing so. Depositing money is required as it will be used for trading. Key Terminology in Forex Trading Do you know!  What are some key terms commonly used in Forex trading? Pip: The smallest possible change in price that a certain exchange rate may make is called a pip, or percentage in point. The majority of currency pairings have a pip of 0.0001. Leverage: With the use of leverage, you may manage a bigger position with less money. Profits may be increased, but there is also a greater chance of suffering big losses. Spread: The spread is the difference between a currency pair’s ask price, which is the price at which you may purchase, and bid price, while this is the price at which you can sell. Lot: In forex trading, a lot is a common unit of measurement. In addition to mini (10,000 units) and micro (1,000 units) lots, a standard lot consists of 100,000 units of the base currency. Developing a Trading Strategy So, let us learn a step by step process of developing a trading strategy. 1. Fundamental Analysis: Economic Indicators: Firstly, keep an eye on important economic metrics that affect currency values, such as GDP, unemployment rates, and inflation. Central Bank Policies: Forex markets may be significantly impacted by the monetary and interest rate choices made by central banks. 2. Technical Analysis: Price charts may be used to spot trends and patterns that indicate future price changes. Indicators: Secondly, to assess market conditions and make wise trading decisions, use technical indicators like Bollinger Bands, Relative Strength Index (RSI), and moving averages. 3. Risk Management: Stop-Loss Orders: Thirdly, to reduce possible losses, use stop-loss orders to automatically cancel a transaction at a preset level. Position Sizing: Based on your trading account size and risk tolerance, choose the right position size. Tips for Successful Forex Trading Do you know! What are some effective strategies for achieving success in forex trading? 1. Start Small: As you acquire knowledge and confidence, progressively expand your exposure by starting with a small trading account. 2. Keep Emotions in Check: However, impulsive trading decisions and large losses might result from emotional trading. Remember your trading strategy and exercise self control. 3. Continuous Learning: Since the forex market is always changing, you should always be learning and modifying your techniques to fit the new circumstances. 4. Diversify: Surely, refrain from investing all of your money in a single trade or currency pair. Spreading out your trades might assist in risk management. Recall that the secret to becoming a great forex trader is having patience and never stopping learning.

Where does most forex trading occur, given that the forex market lacks a physical location or central exchange? The bulk of forex trading takes place on what ’as called the “interbank market “. Unlike other financial markets like the New York Stock Exchange (NYSE) or London Stock Exchange (LSE), the forex market has neither a physical location nor a central exchange.  Understanding the structure of Forex Market The forex market is an over the counter (OTC) market, operating electronically through a global network of banks and non-bank financial institutions (NBFIs) 24-hour period. It has no central location, so trades can occur anywhere with an internet connection! The forex (OTC) market is the largest and most popular financial market worldwide. It involves many traders and organizations globally.  In this market, participants choose whom to trade with based on conditions, prices, and the counterparty’s reputation. How does the daily trading volume in the Forex market compare to other financial markets? Market Size The total size of the market is staggering. According to the Bank for International Settlements (BIS), the average daily trading volume in the forex market reached approximately $6.6 trillion in 2019.  This volume is much larger than that of stock and bond markets. The Forex market is so big due to several reasons. The vast size of the market is attribute to several factors. Where are the major trading centers? Global Reach: The Forex market surrounds the entire globe, with major trading centers in New York, London, Tokyo, and Sydney. This global reach allows for continuous trading across different time zones. Who participates in the Forex market and why? Diverse Participants: The Forex market attracts a broad spectrum of participants, ranging from multinational corporations managing currency risk to individual traders seeking profit from currency rise and fall. You know how currency pairs in the Forex market reflect global economic activity? Economic Impact: Currencies are trading in pairs, and the market reflects the economic health of countries, geopolitical events, and macroeconomic trends, making it a focal point for global economic activity. Which types of Major Currencies in Forex Trading? The chart below shows the seven most actively traded currencies. Because each transaction involves two currencies, the sum of the percentage shares of individual currencies totals 200% instead of 100%. Of all transactions, the U.S. dollar is the most traded currency, making up 84.9%. The euro’s share is second at 39.1%, while that of the yen is third at 19.0%. On this list the top spots most of the major currencies dominate! Why the dollar considers the king in the forex market? We often mention the U.S. dollar (USD) because it’s part of every major currency pair. Since these major pairs make up 75% of all trades, paying attention to the USD is crucial. The USD is king. According to the International Monetary Fund (IMF) reports that about 62% of the world’s official foreign exchange reserves are held in U.S. dollars.   These reserves, maintained by central banks in various foreign currencies, highlight the USD’s importance. With nearly every investor, business, and central bank holding USD, its movements are closely monitored globally. There are significant reasons why the U.S. dollar plays a central role in the forex market. Significant Reasons The United States economy is the largest in the world. The U.S. dollar is the reserve currency of the world. The United States has the largest and most liquid financial markets in the world. The United States has a stable political system. The United States is the world’s sole military superpower. The U.S. dollar represents about half of international loans and bonds. Many countries and foreign companies borrow in USD. The U.S. dollar serves as the primary currency for numerous international transactions.  For example, oil is priced in U.S. dollars. So, if Japan wants to buy oil from Arabia, it can only be bought with the U.S. dollar. If Japan doesn’t have any dollars, it has to sell its yen first and buy U.S. dollars. Basically, the world is extensively dependent on continuous USD supply to facilitate trades, payments, and loans.  How does speculation influence trading decisions in the forex market? Speculation in the Forex Market These are the main functions of the forex market are: To transfer funds from one currency of a country to another currency. Provide short-term credit to finance trade between countries. To avoid or “hedge” against foreign exchange rate rise and fall from when a transaction is initiated to when payment is received. Once important things in the forex market, most currency trading is driven by speculation, even though commercial and financial transactions contribute to the trading volume. To put it another way, mostly trading volume comes from traders who buy and sell based on the short-term price movements of currency pairs.  The trading volume brought about by speculators is estimated to be more than 90%! This makes market liquidity, which is the ability to buy or sell a large quantity of something with minimal price impact, very high. The increase in market liquidity since the 1970s has yielded many benefits. For a short-term trader, liquidity is crucial because it affects how easily prices can move. Moreover, in a liquid market like forex, large trades have minimal impact on prices. However, liquidity can vary based on the currency pair and time of day. In our forex trading sessions, we’ll cover how the time of your trades can impact the currency pairs you’re trading. Meanwhile, let’s explore the various methods individuals can use to trade currencies.

In our previous article, we probed into the essentials of forex trading, focusing on how major currency pairs such as EUR/USD and USD/JPY influence the market. Today, we’ll look remaining currency pairs like minor currency pairs, Exotic currency pairs . we’ll examining their significance and influence on global trading patterns. At the moment, you are curious to know the other currency pairs for your trading practices. So, Let’s begin with a detailed discussion with Assh. What is Liquidity in Forex?  Liquidity refers to the level of activity in a financial market.  In forex, it’s based on the number of active traders and the volume of trades in a specific currency pair. More frequently traded pairs, like EUR/USD, have higher liquidity compared to less traded pairs like AUD/USD. Major Cross-Currency Pairs/Minor Currency Pairs Cross-currency pairs, or simply “crosses,” include any two major currencies except the U.S. dollar.  Major crosses are also known as minors and, while not as frequently trading as the majors, they still offer ample trading opportunities in forex. The most actively traded crosses involve the euro (EUR), Japanese yen (JPY), and British pound (GBP). There some Minor Currency Pairs with major three non-USD currencies Euro Crosses Currency Pairs Countries Currency Pairs FX Geek Speak Eurozone/Switzerland EUR/CHF “euro swissy” Eurozone/United Kingdom EUR/GBP “euro pound” Eurozone/Canada EUR/CAD “euro loonie” Eurozone/Australia EUR/AUD “euro aussie” Eurozone/Sweden EUR/SEK “euro stockie” Eurozone/Norway EUR/NOK “euro nockie” Eurozone/New Zealand EUR/NZD “euro kiwi” The EUR/CHF can be impacted by geopolitical stability in Europe. The EUR/NZD is often driven by agricultural export performance from New Zealand. The EUR/GBP pair often reflects economic sentiment between the Eurozone and the UK. The EUR/AUD tends to be affected by economic data from both the Eurozone and Australia. Keep in Mind  Yen Crosses Currency Pairs Countries Currency Pairs FX Geek Speak Eurozone/Japan EUR/JPY “euro yen”/ “yuppy” United Kingdom/Japan GBP/JPY “pound yen”/ “guppy” Australia/Japan AUD/JPY “aussie yen” Canada/Japan CAD/JPY “loonie yen” Switzerland/Japan CHF/JPY “swissy yen” New Zealand/Japan NZD/JPY “kiwi yen” What did you think about Yen Cross? The CAD/JPY pair is influence by crude oil prices, a key export of Canada. Generally, the GBP/JPY pair is know for its volatility and wide trading ranges. AUD/JPY is influence by commodity prices and risk sentiment in global markets. The NZD/JPY pair is sensitive to changes in dairy prices, a major export of New Zealand. Pound Crosses Currency Pairs Countries Currency Pairs FX Geek Speak United Kingdom/Australia GBP/AUD “pound aussie” United Kingdom/Canada GBP/CAD “pound loonie” United Kingdom/Switzerland GBP/CHF “pound swissy” United Kingdom/New Zealand GBP/NZD “pound kiwi” Take note: GBP/AUD can reflect shifts in interest rate policies between the UK and Australia. Did you know that, there are several other currency cross pairs that also trading in forex? So, Let’s start to find the answer with Assh. Other Crosses Currency Pairs Countries Currency Pairs FX Geek Speak Australia/Canada AUD/CAD “aussie loonie” Australia/Switzerland AUD/CHF “aussie swissy” Australia/New Zealand AUD/NZD “aussie kiwi” Canada/Switzerland CAD/CHF “loonie swissy” New Zealand/Switzerland NZD/CHF “kiwi swissy” New Zealand/Canada NZD/CAD “kiwi loonie” Remember: The AUD/CHF pair is sensitive to global risk appetite and safe-haven flows. Exotic Currency Pairs Exotic currency pairs consist of one major currency and one from an emerging market.  These pairs consist of one major currency and one currency from an emerging or smaller economy, such as the USD/TRY (U.S. Dollar/Turkish Lira) or EUR/SEK (Euro/Swedish Krona).  In short, these pairs are less liquid and more sensitive to economic and geopolitical events, leading to higher transaction costs and more volatility. There are some examples include: Countries Currency Pairs FX Geek Speak United States/Brazil USD/BRL “dollar real” United States/Saudi Arabia USD/SAR “dollar riyal” United States/Singapore USD/SGD “dollar sing” United States/South Africa USD/ZAR “dollar rand” United States/Thailand USD/THB “dollar baht” United States/Mexico USD/MXN “dollar mex” United States/Russia USD/RUB “dollar ruble” or “Barney” United States/Poland USD/PLN “dollar zloty” United States/Chile USD/CLP – United States/Hong Kong USD/HKD – This makes them both challenging and potentially rewarding for traders who are willing to explore the diverse economic landscapes and geopolitical factors that influence these currencies.  Aside from the three main categories of currency pairs, there are additional “groups” of currencies that are commonly referenced in the FX world and should be on your radar. The interesting points about Exotic Currency Pairs: Higher Volatility: Exotic pairs often experience larger price swings, offering potential for higher profits. Lower Liquidity: These pairs are less traded, which can lead to wider spreads and more trading costs. Economic Diversity: Exotic pairs provide exposure to emerging markets and their unique economic factors. Geopolitical Sensitivity: Political events and stability significantly impact the value of exotic currencies. Commodity Influence: Many exotic currencies are tied to commodity prices, adding another layer of market analysis. Cultural Insight: Trading exotic pairs can offer a deeper understanding of global cultures and economies. Risk and Reward: The higher risk associated with exotic pairs can lead to substantial rewards for informed traders. Other Currency Groups G10 Currencies The G10 currencies are the most heavily trading currency at global level and include: Currency Code Country Currency Name USD United States dollar EUR European Union euro GBP  United Kingdom pound JPY Japan yen AUD Australia dollar NZD  New Zealand dollar CAD Canada dollar CHF Switzerland franc NOK Norway krone SEK Sweden krona DKK Denmark krone The G10 currencies are heavily influenced by key economic indicators such as GDP, inflation, and employment rates. The central banks of G10 countries, like the Federal Reserve (USD), European Central Bank (EUR), and Bank of Japan (JPY), play a crucial role in setting monetary policy and interest rates. G10 currencies often form the major currency pairs and are widely traded in forex market, such as EUR/USD, GBP/USD, and USD/JPY. Due to their economic significance, G10 currencies react strongly to global events, financial news, and geopolitical developments. The Scandies Scandinavian currencies, known as the “Scandies,” include: DKK (Denmark) – krone SEK (Sweden) – krona NOK (Norway) – krone The “Scandies” refer to the Scandinavian currencies, including the Swedish Krona (SEK), Norwegian Krone (NOK), and Danish Krone (DKK). So, Let’s

Now you have the idea that Forex trading, or foreign exchange trading, involves buying one currency while simultaneously selling another. But it operates through a “forex broker ‘or a “Contract for Difference (CFD)” provider and involves trading in currency pairs. Let’s dive into the fascinating world of currency pairs with Assh!  What is a Currency Pair? A currency pair represents the relative value of two different currencies in the foreign exchange (FX) market. For example, in the EUR/USD currency pair. When you  trade currency pairs, you’re basically buying one currency while simultaneously selling another.  Moreover, Think of trading currency pairs as a “balance scale”, with each currency on opposite sides, constantly shifting up and down as their values change. An exchange rate is the price of one currency in terms of another.  These rates fluctuate based on various economic factors and the relative strength of each currency.  Forex trading capitalizes on these fluctuations to make profits. Understanding the Currency pairs Now we are going to discuss what is base currency and a quote currency? In currency trading, the base currency is the first currency list in a currency pair, while the quote currency is the second currency. The exchange rate shows how much of the quote currency is need to purchase one unit of the base currency. Imagine you’re at an international fair, and you see a booth selling exotic fruits. The sign reads “1 Dragonfruit = 3 Mangoes.” Here, the dragonfruit is the base currency, and the mangoes are the quote currency. In this example, the base currency (dragonfruit) is value at one unit, and you need three units of the quote currency (mangoes) to buy one Dragonfruit. According to this, in the currency pair EUR/USD, the euro (EUR) is the base currency, and the US dollar (USD) is the quote currency. If the exchange rate is 1.20, it means that 1 euro = 1.20 US dollars. In other words, you would need 1.20 USD to buy 1 EUR. Types of Currency Pairs Now we are going to discuss the main three categories: 1. The Majors  2. The Crosses  3. The Exotics The majors pairs always include the U.S. dollar (USD) and are the most traded pairs in the forex market. The crosses currency pairs also known as minor currency pairs, these do not include the U.S. dollar but involve other major currencies. Exotic pairs are make up of one major currency and one currency from an emerging market. The major Currency pairs So, let’s explore the world of the major currency pairs used in forex trading with Assh. In the world of forex trading, the major currency pairs are the most frequently trad and the most liquid pairs.  These pairs involve the U.S. dollar (USD) on one side, reflecting the prominence of the U.S. economy in global finance. Countries Currency Pair FX Geek Speak Eurozone / United States EUR/USD “euro dollar” United States / Japan USD/JPY “dollar yen” United Kingdom / United States GBP/USD “pound dollar” United States / Switzerland USD/CHF “dollar swissy” Australia / United States AUD/USD “aussie dollar” United States / Canada USD/CAD “dollar loonie” New Zealand / United States NZD/USD “kiwi dollar” United States / Singapore  USD/SGD “Sing dollar” The considering Eight Major currency pairs Interesting fact: The Singapore Dollar, playfully nicknamed the “Sing,” made its debut in 1965, marking a new era of financial independence for the city-state and it had issued by the Monetary Authority of Singapore. Liquidity refers to the level of activity and ease with which assets can be buy or sell in the financial market. Why Trade Major Currency Pair? Do you know why it is important in Forex Trading?  Major currency pairs are attractive to forex traders for several reasons: 1. High Liquidity: Additionally, these pairs are the most liquid in the forex market, meaning they can be traded with minimal price movement and low transaction costs. 2. Lower Spreads: Due to their high liquidity, these usually have lower spreads, which reduces trading costs. 3. Economic Stability: The countries involved in these pairs typically have stable and robust economies, making the pairs less volatile compared to exotic pairs. 4. Availability of Information: Furthermore, there is a wealth of economic data and news available for the countries involved in this, aiding traders in making informed decisions.

Do know that what is traded in forex? At its heart, forex trading is the exchange of money. But do you know? What is money? So, let’s start to explore what is trade in Forex with Assh. Simply, in the forex, we trade with money, especially currencies. Concept of Money Money is any item or medium of exchange that symbolizes perceived value. Most modern money is fiat currency issued by governments. August 1971, U.S. Pres. Richard M. Nixon At its heart, forex trading is the exchange of money. Unlike other markets where physical goods has bought and sold, forex trading revolves around the relative value of one currency against another. Traders buy and sell different currencies to profit from fluctuations in their exchange rates. Now understand it: when you trade forex, you are essentially buying a share in a particular country’s economy, similar to purchasing stock in a company. The value of a currency, therefore, reflects the market’s perception of the health and stability of its respective economy. For instance, if you buy US dollars, you’re essentially investing in the US economy, betting it will perform well and its currency will appreciate. your prediction is correct and the dollar strengthens against other currencies, you can sell it back to the market at a profit. In general, the exchange rate of a currency versus other currencies reflects the condition of that country’s economy compared to other economies. Major Currencies Traded in forex While numerous currencies has traded globally, most forex transactions involve a select group known as the “major currencies.” SO, you can trade; as a new forex trader, you will probably start trading with the major currencies. They’ve called “major currencies” because they’ve the most heavily traded currencies representing some of the world’s largest economies. In short, currencies are the name of the game. Some consider only USD, EUR, JPY, GBP, and CHF as “major currencies.” Then, they label AUD, NZD, and CAD as “commodity currencies.” To simplify things, we consider all eight currencies as the “majors.” These include: They  have listed by their symbol, country, currency name, and cool nicknames: Country Currency Name Symbol Nickname United States Dollar USD Buck Eurozone Euro EUR Fiber Japan Yen JPY Yen United Kingdom Pound Sterling GBP Cable Switzerland Franc CHF Swissy Australia Dollar AUD Aussie New Zealand Dollar NZD Kiwi Top 8 countries and their currencies Did you know that Currency symbols always have three letters? The first two identify the name of the country, and the third letter identifies the name of that country’s currency, usually the first letter of the currency’s name. By 1973, the International Organization for Standardization (ISO) established the three-letter codes for today’s currencies. For example, AUD stands for Australian dollars. Easy enough? The currencies in the chart above are called the “majors” because they are the most widely traded. Interesting fact: These three letters are known as ISO 4217 Currency Codes. Now, we will Explore buying and selling currencies as short-term trades, long-term investments, or something in between. The Core of Forex Trading Forex trading is fundamentally the buying and selling of global currencies. In this vast and dynamic market, currencies are traded in pairs, and the ever-fluctuating exchange rates determine their value. Whether you’re engaging in short-term trades, long-term investments, or something in-between, currencies are the core of every forex transaction. In forex, you trade with currencies and this can be likened to buying and selling shares in a country’s economy. A currency’s exchange rate reflects the state of its economy compared to others. Major currencies include the USD, EUR, JPY, GBP, CHF, AUD, NZD, and CAD. Each currency has a unique three-letter code established by the International Organization for Standardization (ISO). Are you excited to know about the pair currency and want to know which pair is most traded in forex? You will be waiting for it. See you in the next article.

Hi! It’s Assh. Are you excited to learn about forex trading? Let’s start. What is Forex? Do you know? Forex, often known as foreign exchange, is the marketplace where currencies are purchased and sold. It is where individuals can exchange one currency for another and earn a possible profit if their forecasts on currency fluctuations are accurate. Travelling and Currency Exchange You are going on a trip to another country. When you arrive in a new country, you often need to exchange your home currency for the local currency. You do this at a currency exchange booth at the airport. Understanding Exchange Rates We will now learn about exchange rates. There is a board with different exchange rates at the currency exchange counter.  If you see that one US dollar equals 7.27 Chinese Yuan. You think, “GREAT! I have ten dollars, so I get 72.70 Chinese Yuan.” In this simple exchange, you have engaged in the foreign exchange market by exchanging one currency for another. Currency Exchange and Market Dynamics When your trip ends, you return to the currency exchange booth to convert your remaining Yuan into dollars. You observe that the currency rates have changed since your arrival.  These changes in exchange rates are the key factors that enable a person to generate profits in the foreign exchange market. If the rupees have gained value against the dollar, you may receive more in return than you originally spent. Forex trading involves the buying and selling currencies based on their changing values. By understanding how exchange rates work and fluctuate, you can actively participate in the forex market and capitalize on these movements. The Forex Market The forex market, FX, is the largest financial market globally. It’s a decentralized market where various participants trade currencies, like central banks, financial institutions, corporations, hedge funds, and individual traders. Because of this wide range of participants, exchange rates change constantly. Speculation in Forex The majority of currency transactions in the forex market are conducted to speculate. Traders purchase currencies expecting their value to increase to sell them at a higher price later. This differs from the small percentage of foreign trade and tourism transactions. Forex Market Size The foreign exchange market is significantly larger than the stock market. The New York Stock Exchange (NYSE) has a daily trading volume of approximately $200 billion, but the FX market has a daily trading volume of around $7.5 trillion. However, most forex traders use the spot market, which is about $2 trillion daily. Retail traders, such as us, make up a smaller portion of this, estimated to be roughly $200-300 billion daily. Market Hours/ Trading Hours The forex market is open continuously, 24 hours a day, five days a week. It moves through various global financial hubs, starting in New Zealand and moving to Sydney, Tokyo, Singapore, Hong Kong, Frankfurt, London, and New York. Traders can engage in this ongoing cycle at almost any time. Well, guys, the final overview of the study is that Forex trading is exchanging one currency for another based on the changing exchange rates. It’s the largest and most dynamic financial market, offering opportunities for traders worldwide. Whether exchanging money for travel or speculating on currency movements, you’re participating in the dynamic world of forex.