Well, You have came here to learn about foreign exchange a.k.a Forex and ways to make money from it. All i could say is you are lucky to end up in the right place. I am going to teach you all about forex from basics to pro strategies in this and following lessons. And one thing i have to mention is I have made this course in such a way that you will learn everything with education and fun. because too much seriousness is not good for health and wealth.
So are you ready to dive into the pool of forex? Lets get into it
Foreign Exchange Market
A Market is a place where you can buy and sell things. So from this you can guess what foreign exchange market, Right? Foreign Exchange market is a place where you can buy and sell currencies. It is the single biggest financial market in the world where every country currencies traded with other currencies. In fact if i say you the total turnover of forex market in a single day you will be shocked with the figure. Do you want to know it? Get ready for the shock
$6,000,000,000,000!!!It is $6,000,000,000,000 each and every day. If you compare the turnover of world largest Stock Market New York Stock Exchange with Forex Market it will look like a ant and elephant.
Now you must have excited seeing the huge number of the forex market turnover. I will give you another reason to get excited. If you have ever traded stocks you must have known that trading time is always 9 to 5 or some difference in some countries. But one thing common is all the stock market is closed during night. But the biggest advantage of forex market is it is open 24 hours a day. You dont need to worry about your 9 to 5 job anymore because you can do your analysis in night and place a trade too!!!!
Forex Market have no central market place and it is the main reason for it to be opened round the clock. However it is closed on Weekends where you cannot place trade or close your exciting trades.
If there is a marketplace there should also be players also known as traders. It is them who make the market to sustain and grow. When it comes to forex market the players are categorized into several levels. We are going to see them one by one.
Central Banks and Other Banks
they occupy the top place in the foodchain of forex market (food chain? Just kidding). They are the bug mama and you cannot beat them ever. So be careful with their moves, they have lot of things to deal with currency exchange rates.
Banks around the globe take part in forex market in two means. First they facilitates trading for retail traders (It is us. In detail below). When they do it they are called as Dealer and they earn profit from the trading commission we pay. The second stand is they do speculative trading like you and me. But have in mind that they have lots of resources and talents which we cannot get access, so we should never take a position in the opposite side of banks.
Central Banks are the one who regulate stuffs like interest rate based on various economic factor and indicator like NFP, unemployment rate. But as of now i don't want to go deep into that because any further will make you bored.
Financial Institutions and Hedge Fund Managers
They are the one who are next in the list after Banks and Central Banks. They manage accounts with money ranging few few millions to billions. They usually take part in forex market when they mange pension from International borders. They use forex market for hedging purposes.
Multi National Companies
Companies which do business across the globe take part in forex market to convert one country currency to another. For example if a German company exports product to Unites States then they have to convert the US Dollar they receive to Euro. this takes place in forex market. Even companies like Apple and Samsung are in this!!!
Retail forex traders
Finally it us who are retail traders in the players list. The percentage we occupy forex market in extremely low but the fact is it is growing extremely fast and said to be the best marketplace for retail traders. Since we are in the last level of foodchain we have nothing in hand to control exchange rates of currency pair. All we have to do is to analyse the price movement and speculate the future. the most common practice to analyse the price movement are Fundamental analysis and technical analysis.
Technical analysis is based on charts and various technical indicators. It also have method to use only naked charts which is called Price Action Trading. Price Action Trading is most widely used by retail forex traders.
Fundamental Analysis is based on economic parameters and indicators like interest rate, unemployment rate, NFP etc. It is little difficult for us so my personal advice is to stick with technical analysis for trading and use fundamental analysis for trade confirmation.
Get a Chill Beer Bro
I hope you must now have an essence of what forex trading is. When i first heard about forex trading 5 years back i was worried on how to make money when there are bug players like JP Morgan. But when i learned more i realized that i was wrong. Because you don't need to compete with them to be profitable in forex market. In fact you can trade along with them.
Thats all for this post and i think you and me need a break. Share this post and show me that you have the same care as i do for you. Do leave a comment about things which you likes the most in forex market.
In the Next post i am going to compare stock market and forex market, so don't miss it.