Forex trading is a very trendy and beneficial way of making money and conducting global businesses. Now, if you don’t have a clue about Forex or trading, then you should first know about this field, like what Forex is, the forex market, and what traders are. Then meet up with all the necessary requirements, and you can start trading.
What Is Forex?
The term “Forex” is the short form of “Foreign Exchange,” and it is also known as FX. Now, let’s look deeper into the world of Forex. As I said earlier that Forex means Foreign Exchange. So, it’s easily understandable that forex trading is actually trading or exchanging currencies. More specifically, exchanging one currency for another is Forex trading. Now, there could be many reasons to exchange a currency, but it is happening a lot nowadays for global trade and businesses. According to the data for 2019 from the Bank of International Settlements, the trading volume of that year for foreign exchange was $6.6 trillion.
What Is Forex Market?
The forex market is where Forex trading is conducted. I mean, in the Forex market, people exchange foreign currencies for their purposes. However, it is a very important platform for all Forex traders because if they don’t have a market that demands foreign currencies, then how will the global trade and businesses will be conducted.
Let me give a simple example; suppose you have traveled to America from Europe, and you want to buy some food. Now, if you don’t have American dollars, then you don’t be able to buy food or other necessary things. So, you will need to exchange your currency so that you can conduct trade and travel or whatever purpose you have.
Who Is a Forex Trader?
A Forex trader is a person who trades currencies in foreign exchange. Now, anyone can become a forex trader if he or she has the necessary skills, money, and knowledge. However, there are various types of Forex traders who conduct trading in the Forex market. Specifically, there are six types f Forex traders who trade in the Forex market, and they are:
- Scalper – Scalpers are very fast lane Forex traders who only focus on the short-term holding positions.
- Day Traders – These types of traders are also fast lane traders. That is because they only trade for a trading day and close all their trading on that trading day.
- Swing Traders – These types of traders trade longer than a single trading day, specifically for a couple of weeks, and they also use various strategies.
- Position Traders – These types of Forex traders hold the trades for more than several weeks, and it could last for a year as well.
- Algorithmic Traders – These types of traders don’t use their strategies. Instead, they rely on various computer algorithmic programs that trade for them at the most suitable prices. These types of traders don’t trade manually. Instead, they set up various algorithms that enter and exit markets for them at the most suitable prices. Some algorithmic traders also participate in copy trading, which is a form of social trading where traders use algorithms to replicate other traders’ trades when certain parameters are fulfilled.
- Event-Driven Traders – These types of Forex traders use information charts and make their decisions whether to buy a currency or not.
I repeat you must do your homework first and get all the necessary knowledge before jumping into the Forex world.