Learn Online Forex Courses for New Beginner Traders

The word forex which is abbreviated from the words Foreign Exchange represents the online currency exchange market. Forex, Forex or Currency Exchange market are the many names used to describe the forex market.

Forex provides an alternative investment to traders and investors. Retail traders or the individual investors trade the forex market for speculation purpose. Traders will place trade in the currency exchange market and try to make profits from the currency market moves.

Forex trading is basically the trading of one currency for another. Forex trading activities involve both commercial and speculative trading transactions which make the forex market the largest financial market in the world.

When one currency is exchange for another in forex trading, one currency is purchased with the other currency. This means that when a trader buys one currency they simultaneously sell the other currency. The forex market is also an Over The Counter market which means forex trades can be opened from anywhere in the world.

Most forex trading activity is done for speculation and when most people talk about Forex they are most likely referring to speculative forex trading. The forex market participants that trade for speculation purposes are the small individual investors and traders and they are commonly referred to as retail investors.

The forex market now trades a total daily turnover of $7.2 trillion dollars because of the growth that is as a result of these retail investors joining the forex market. 95% of all trade transactions are made by retail investors.

The retail investors often trade forex online and open trades from their trading accounts that they have opened with their forex brokers. This makes the forex a global trading market place where traders can open trades in this market from anywhere in the world. The size of the market price means the forex market is very liquid and traders can open trades at any time of day or night during the forex trading week. This liquidity also means that no one can control the forex market because of its sheer size.

Forex rates keep moving up and down all the time and these market movements are determined by a country’s economic stability and political stability. Economic reports such as a country’s GDP or Inflation or employment data all of which keep changing and when these reports are announced, their announcement will result in the movement of the currency that belongs to these economies.

These market movements can be studied using technical analysis and fundamental analysis.

Technical analysis is the study of market movements based on different price pattern formations that can be interpreted differently depending on the pattern formed. This study of price movement and price patterns is known as price action trading. Other technical analysis methods include use of charts to interpret currency market moves. Technical analysis also includes use of technical indicators which are tools that calculate the momentum of a currency market trend.

Technical analysis also involves study of market trends. A trend is a general direction of currencies in the forex market that can be up or down. In the forex market currencies generally move in trends and when a trend is formed prices keep moving in that particular direction for a period of time. For this reason when a trend is formed then traders keep opening trades in the same direction for as long as the trend continues to move in that direction. Traders will use technical analysis to determine the direction of these market trends and also to determine the momentum of these market trends.

Fundamental analysis is the study of price movements by interpreting economic reports to determine the likely direction that a currency is likely to move. For example if the GDP reports of a country show strong economic growth then traders can predict that the currency of that economy will appreciate in value compared to other currencies. This type of analysis will require the trader to read a lot about all the various economic reports and learn how to interpret each report. This type of analysis may take time to learn and master. It also requires that traders keep up with the numerous economic reports released daily by different countries.

Forex Brokers

Because the online currency exchange market does not trade from one central place, traders need to trade with a forex broker that will connect them to the online currency exchange market.

To start trading traders need a computer that is connected to the internet. Traders then open an account with an online forex broker and from this account traders can place currency trades directly to the online forex market. Once a trader opens a trade on their account, the broker will then place these trades on the forex market on behalf of the traders. Once the trader decides to close their trades, then the broker will close the trades and remove the trades from the online forex market and credit the traders with the profit or loss they have made from trading the market.

With the coming of many forex brokers traders can open accounts from anywhere in the world and trade from any location in the world directly from their home computer or office computer. The ease with which a trader can open an account with any online forex broker and trade from anywhere in the world is what has contributed to the growth of the forex market especially among the retail investors and retail forex traders.

Forex Trading Platforms

The forex broker provides traders with forex trading software that are commonly known as forex trading platforms in the forex market. From these trading platforms traders can log in to their accounts, place trades from this trading platforms and also monitor their account balance from these trading platforms.

The forex trading platforms provide traders with streaming currency quotes and forex charts that plot these forex quotes in the form of graphs known as forex charts.

A forex trading platform will for example display currency pairs such EURUSD, GBUSD, USDCHF and USDJPY and also display streaming currency quotes of these currency pairs.

If the streaming currency quotes are moving up, then the forex chart of these currency quotes will show a general upwards direction and traders can buy these currency pair based on the upward movement of these currency quotes. This is why forex charts are provided and drawn automatically on the forex trading platform so that traders can determine the direction of the currency market and therefore be able to decide what direction to place their trades.

How to Open a Trade

Once a trader opens a buy or sell trade, the trader has to hold on to this trade for some time so as to give the exchange rate time to move in one or the other direction. This trade is known as a position. A trader may only open their trade for a few minutes and only aim to make little profits or a trader may hold their trade for hours so as to try and make more profits. However, because forex is speculative trades may also move in the opposite direction of the trade and trader should be ready to close their trades after the loss moves against their position by a number of pips so as to minimize further losses.

Why trade Forex

The number one of why to trade Forex is leverage. With leverage traders can open their account with little capital and borrow form the broker the money required to make trade transactions. For example a trader can open an account with $10,000 and the broker may give them leverage of 100:1 which means traders can borrow up to 100 times their capital, therefore a trader will control $10,000 multiplied by 100 which is a total capital of $1,000,000 that a trade can open trades with.

However, traders should be careful when trading with leverage because leverage increases profits as well as losses and that is why traders should make sure they learn Forex money management rules before they start trading Forex. Money management rules tutorial is covered in this website on the learn forex lessons section under the Forex Key Concepts topics.