T4Trade provides users with access to the $6.6 trillion-per-day FX market, enabling them to trade forex via the leading MetaTrader 4 trading platform. In addition to benefiting from low costs and tight spreads, users can access more than 80 currency pairs. This article will take a closer look at what forex trading is, providing information suitable for beginners.
Forex trading is an exciting industry that has undergone exponential change in recent years, with technological advancements increasing accessibility for global traders. In terms of trading hours, forex is a market that offers significant flexibility, open 24 hours a day five days a week in various jurisdictions globally. The trading week begins at 5pm EST on Sunday and ends at 4pm EST on Friday. Within this extended timeframe, global forex traders can make trades at any hour of the day or night.
Facilitated through banks, brokers and other financial institutions, the forex market has no physical location. Currencies are traded in pairs, e.g. GBP/USD, EUR/USD, etc. To make a profit, the trader has to correctly predict whether the price of one currency will fall or rise against another currency. If the trader speculates that the price will fall, they open a sell position (known as ‘going short’). Conversely, if they speculate that a price will rise, they open a buy position (known as ‘going long’). The forex trader’s profit or loss correlates with how the currency prices move.
Boasting high liquidity due to the frequency and volume of trades, the forex market is the largest of all financial markets globally today. Currency pairs that demonstrate the most liquidity are the majors, i.e. the GBP/USD, EUR/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD and NZD/USD. High liquidity is generally associated with faster order execution and tighter bid-offer spreads, with trades opened and exited quickly – which is an important capability for traders seeking to capitalise on short-term price movements with maximum profits.
For beginner forex traders, there are certain fundamentals to weigh up to mitigate the risk of losing significant amounts of money. First, it is crucial for forex novices to take the time to learn about the markets, studying currency pairs and what influences them before they actually start trading. They also need to develop a solid trading plan, delineating a strategy that fits their character, objectives and level of expertise. Finally, it is crucial for forex traders to know their limits, particularly as a beginner, maintaining discipline and sticking to their plan while trading with rational prowess rather than fear.
Disclaimer: This material is for general informational & educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked in this communication.
