How does Forex Trading work?

As I come across people in my walk of life, I stress more on taking my time to discuss what Forex is, even before talking about what Forex trading is, of course, a word at a time. Let me give you a simple definition of what Forex trading is. This is going to be the most simplified definition you’ll ever come across.

What is Forex?

It simply refers to the Foreign exchange market. Let’s simplify this, with a literal example of course!
Let’s assume it’s holidays, In the course of traveling from the United States to the UK there would be a conversion of the US dollar to the Pound sterling. I am sure a lot of us had to go through this process when we were traveling to other countries.
Do you know you just partook in Forex?

You simply did Foreign Exchange.

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Features about the Forex Market.

Decentralized market

Forex trading is a decentralized market where traders from all over the world can trade currencies.
The forex market is the largest, most liquid market in the world. This means it’s the easiest to enter and exit, and there are no restrictions on who can participate. Let me give you a scenario. Do you know that the United States itself can’t fully control the use of the dollar in the International market system? Yes, they can set laws but this in its entirety doesn’t determine the rates.

Have you wondered, why there is something called the exchange rate?
It’s due to so many factors surrounding foreign exchange, therefore making it decentralized.

No time constraint


Forex trading is generally the trading of one currency pair against another. It is the most traded market in the entire world, and as such it holds a very high level of liquidity, which makes it a very conducive market to trade. More so the Forex market operates round the clock, with open and close times somewhere between 5 am and 10 pm Eastern Time depending on which country you are located in. Due to the high volumes and liquidity available in the currency markets, it makes for a very active market and can be very profitable for investors and traders if they know what they are doing.

Large Trading volume


Forex trading is financial trading that involves the trading of currencies. Forex trading is done in the form of buying one currency and selling another. Forex traders speculate on whether a currency will go up or down in value relative to other currencies. It can be done online or in person at a broker’s office. Forex traders trade currencies to make a profit on fluctuations in their values, or to hedge against other investments or risks. The forex market is huge and trades trillions of dollars each day, with $1.7 trillion traded in one hour alone. This means there are always opportunities to make money in this market. It is one of the largest financial markets in the world.


Let me simplify it as that’s my aim. Take a look at holidays, when a lot of people will be traveling to different parts of the world. There will be a lot of exchange in currency by people. This speaks high volume.
Due to the large number of people that travel every day, there are a lot of activities going on in the foreign exchange market and this causes high volatility. Forex trading is a global market where traders can trade currencies from different countries and is the most liquid market in the world.

When you learn to let go of the need to be right, wrong gradually loses its power to disturb you.

Yvan Byeajee

I know you are wondering what Volatility and Liquidity meant.

What are volatility and liquidity?

Learn the Art of Forex Trading

Do you want to know more about trading? Start your free five-day trial in any of our courses right now.

We have three powerful courses to get you started, regardless of your learning style. You can choose courses taught by real-world experts and learn at your own pace with Jayyy Forex Academy, which offers lifetime access on mobile and desktop. You’ll also learn the fundamentals of trading, other financial assets, advanced forex strategies, and much more. Learn more about Jayyy Forex Academy and get started right away.

Conclusion.

As you’ve been enlightened on the concepts of Forex and Forex Trading with relatable examples.

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