Frequently asked questions that relate to forex trading
The first and foremost question that people ask when it comes to forex trading is what forex is. Fortunately, the answer is very simple and basic but not that obvious. If you have never heard anyone define what forex is, you might not be able to do it yourself that easily. To make things easier and more interesting, I will start by defining forex as the exchange of one currency for another. The exchange is done in the way of buying and selling. As a trader, you will have to buy one currency when its value is lower and then sell it when the price rises. The buying is done using another currency that is often referred to as the counter currency. The currency that is purchased is referred to as the base currency. The base and counter currency are referred to as a currency pair because in order for one to buy and sell currencies, both currencies are necessary. This remains true for all forex brokers with zar accounts.
Where is forex traded?
Now that we have a good understanding of what forex is, it is time to look at where you can trade forex. To answer this question, I will say that currencies are traded on forex markets and these markets can be placed into different types, but the major ones are three. These three types of markets are the futures markets, forwards markets, and spot markets. Of all these three types of markets, spot markets are the biggest. The spot markets also form the basis on which forwards and futures markets are based. There are countless platforms for spot markets that one can choose to go with.
Why is forex traded?
The simple answer to this question is that people trade in forex for the purposes of making a profit. Unfortunately, this takes on two forms, that is speculation and hedging. When traders engage in forex trading for the purposes of speculation, the main goal is to make a profit off of the rise and fall of prices of currencies. On the other hand, people engage in hedging with the main goal of locking in prices for sales and manufacturing in markets located in overseas. Hedging is something that takes more skill to pull off and that is why not every trader engages in it. If you are interested in hedging, you will need to learn more about it before you can do it. The internet is a good place to start your research.
How do I get started with forex trading?
This question is more complex than it actually looks on the surface. If you want to get started with forex trading, it is highly advisable to start by educating yourself about it first. There is a lot to be learned and there is a ton of resources that you can use to do that. Many people have authored e-books about forex trading that you can take advantage of. Secondly, you will need to identify a forex broker that you trust will offer you the best service. This is also not an easy feat to pull off and often requires a lot of knowledge and experience. Online forums on social media and other platforms are a good place to start when you want to identify a good forex broker.