Familiarity with the Forex market
The Forex financial market is a decentralized market whose main players are banks, large financial institutions, governments and individuals with a turnover of about $ 7 trillion a day.
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Foreign Exchange Market or Forex stands for Forex . Foreign currency in Persian is known as foreign exchange, so as a result Forex is called foreign exchange trading .
There are two very important historical events in the foreign exchange market that have had a profound impact on this market. These two historical events were the creation of the Gold Standard Standard System in 1875 and the Bretton Woods System in 1944.
The main idea behind the gold standard system has been for governments to back up their currency in gold and guarantee it with gold. For example, to convert two currencies to each other, it was enough to get the amount of gold needed to buy them. World War I ended this system because countries pursued monetary policies that were not based on a fixed exchange system in the standard gold system. The importance of an alternative system to the gold standard system led to a new contract in 1944 in Bretton Woods. The creation of the new system led to the formation of fixed exchange rates, and the United States set the value of the dollar at $ 35 per ounce of gold. Due to the problems of US Treasury reserves in 1970, the system finally came to an end in 1971, and this was the time of the formation and beginning of Forex.
Unlike traditional financial markets, which take place in a specific place and organized rules, the Forex market is not concentrated in a specific place, and in fact, transactions between the parties to the transaction are done through the Internet or interbank network. Currency exchanges are a kind of so-called OTC market.
The reason for currency exchange in the currency exchange market
After the Bretton Woods Agreement in 1971, when the floating exchange rate system was liberalized, the value of the currencies of different countries changed. Therefore, the need for foreign exchange services arose. The easiest way to trade around the world is to convert one currency to another. Or for the exchange of goods and services between countries or companies of different countries. Of course, the maximum amount and volume of exchange to earn profit is the difference between the purchase and sale price.
Forex market participants
All banks, including commercial and central and investment, large financial institutions, multinational corporations, businessmen, insurance companies, export and import companies, pension funds, speculators and individuals in those different currencies such as the US dollar, They trade Euros, Pounds, Yen and..
- Possibility of 24-hour trading from Monday to Friday
- Possibility of two-way ( two-way ) trading and the possibility of profit in increasing or decreasing prices
- Use Leverage or leverage to increase purchasing power
- Ability to determine the amount of profit and loss and make transactions without your presence
- Very low cost for transactions
- Very high liquidity
- Easy and fast access
- Lots of trading opportunities
- High flexibility in terms of market time, application of various strategies, number and volume of transactions and…
- No need to pay taxes and duties and…
- With age conditions over 18 years and minimum capital
- Minimal involvement in the complexities of government law
- Zero trading commission
- Ability to trade from anywhere in the world
- Ability to use a free training account (demo account)
How are transactions done?
Forex market hours
Hour market, Forex trading from Monday to Friday for 24 hours is at 1:30 pm Tehran time on the easternmost point in New Zealand on Monday morning beginning at 1:30 am Friday at America West will be closed. Of course, these hours can be different in special circumstances and on special days in brokerages.
Basic Forex Terminology
Among the basic terms and concepts of Forex, the following can be briefly mentioned:
- Offer Price: Bid
- Purchase price offer: Ask
- Price difference between buying and selling: Spread
- Each currency: Pip
- Forex Broker: Forex Broker
- Ascending Market: Bull Market
- Bear Market: Bear Market
- Leverage: Leverage
Brokers are companies that allow you to operate in the Forex market with trading software systems and be able to trade and trade in this market. Brokers are classified based on security and the amount of licenses received.
Forex related sites
As a decentralized market, Forex does not have a unique site or platform, and different brokers communicate with you through different systems. In between, there are a number of sites for effective news tracking, such as forexfactory and fxstreet.
Original, cross and exotic currency pairs
Each transaction involves a currency pair because you have to buy and sell the value of one currency against another. For example, the dollar / euro currency pair, denoted by EUR / USD, has the highest number of transactions in the market. EUR is the first currency in this currency pair and it is called the base currency and USD is the second currency which is called the opposite currency. When you see the EUR / USD price on the trading platform, it shows the value of the EU Euro against the US Dollar.
Major currency pairs: They make up about 80% of the trading volume and are called currency pairs in which USD is one side of the currency pair. The main currency pairs include: EUR / USD – USD / JPY – GBP / USD – AUD / USD – USD / CHF – USD / CAD – NZD / USD
Cross currency pairs are currency pairs in which there is no US dollar. For example: EUR / GBP – EUR / JPY – GBP / JPY – NZD / JPY – CAD / CHF – AUD / JPY
Exotic currency pairs are the currencies of smaller or emerging economies that are associated with a major currency. Such as Mexican, Turkish and ارز currencies
Every brokerage or broker in the market has a special platform and software system through which you can do your trading. In the meantime mail tool system Meta Trader Meta Trader very popular and is known by most agencies is used. After installing this program on your mobile or computer, you can check the prices and start your trades.
Register in Forex and deposit and withdraw money
You can register by visiting the sites of various brokers , and start trading after depositing the initial amount and activating your account. Each broker has different conditions and ways to deposit and withdraw money, which he has mentioned on his site. The initial amount to start trading varies and may be between $ 10 and $ 20.
Strategy, trading system and analysis methods
You need Forex market analysis to determine when to buy or sell which currency . The science of market analysis is generally divided into two categories : fundamental and technical . After learning each of these methods and choosing the right strategy for yourself, you can trade and based on the strategy you have learned and practiced, you can find out when is the right time to buy and sell currencies.