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Forex Trading

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What is Forex Trading?

You might have came across the term Forex on the Internet , Social Media or though ads on YouTube or Tik Tok. In this post I am going to explain partially what Forex trading is all about and why it is such a hype.

Forex, is the global marketplace for buying and selling national currencies for example USD, EUR or JPY, hence the term Forex Trading. It operates through currency pairs, such as EUR/USD or GBP/JPY, where one currency is exchanged for another. The goal is to profit from the changes in exchange rates as the currency values fluctuate due to economic, political, and market factors. Forex trading takes place over-the-counter (OTC), meaning transactions are conducted directly between parties, typically through brokers. It’s known for its high liquidit, sometimes high volatility and a 24-hour availability (Monday to Friday). A chart with currency pairs as shown below shows the movement of the currency pairs prices.

The chart shows the Australian Dollar (AUD) against the Japanese Yen (AUDJPY). To the far right is the current price and on the bottom is the time. As in the image, price is always flactuating up and down hence profit or loss to the traders.

Forex Brokers

A forex broker is a financial services company or individual that provides traders with access to a platform for buying and selling foreign currencies. Acting as an intermediary between retail traders and the larger forex market, a forex broker offers tools, real-time data, and trading platforms to facilitate transactions in currency pairs. Brokers may offer various account types, leverage options, spreads, and trading tools. They typically earn through spreads (the difference between the bid and ask price) or commissions on trades. Some brokers also provide educational resources, market analysis, and risk management tools to support traders.

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