At Oxford Funding , you can find a general review of everything related to this market, which could be perfect for those who are looking for a guide on forex trading for beginners
Every day more and more people, investors, traders and companies are involved in the world of trading, thanks to the great results that thousands of people have perceived through this market.
What is Forex?
The Forex market (also known as Forex, Foreign Exchange, or FX) is a world market where currencies are traded.
It started with the objective of making the monetary flow derived from international trade easier. The daily volume of transactions leads to moving around five trillion dollars, trading in a day what Wall Street can move in a month.
So it is huge.
Many operations are carried out for practical reasons, but the vast majority of currency conversions are carried out by investors to make a profit.
How does it work?
All Forex trading involves two currencies because the idea is that you are comparing the value of one currency against another.
The EUR / USD are the most traded currency pair in the world. The EUR is the base, and the USD is the counterpart in the currency pair. When you see a price quote on your platform, you would be seeing what one euro costs in dollars.
There will always be two prices, one is the buy price and the other is the selling price. The difference between themes is the spread.
When you buy or sell, you are buying or selling the first currency in the pair.
Having this clear, in a nutshell basically a forex trader is dedicated to “predicting” high or low prices of currencies, to make a profit when buying and selling.
Who can participate in Forex?
Although you can start in Forex even with a small amount of money, most of the time Forex it’s used by investors, traders, financial institutions, or companies with large capital.
The main operators in the foreign exchange market are the following:
1. Financial institutions
They can participate in the market in a speculative or hedging way or acting on behalf of a client.
Any international economic transaction, from a transfer to the purchase of foreign shares, implies a previous passage through the Forex market.
2. Commercial companies
Companies in the non-financial sector that operate with international clients and suppliers also intervene in the market.
The operations of some multinationals can have an unpredictable impact on the currency exchange rate of small countries.
3. Central banks
they operate in foreign currency markets to control the money supply, inflation, and/or interest rates of the currency of their country. Most of the time they impose
exchange rates or even use their international reserves to stabilize the market.
The expectation or rumor of a central bank intervention may be enough to alter the value of a currency. However, central banks do not always achieve their objectives, and in some cases, the market may impose itself on a central bank.
4. Individual investors through intermediaries
Thanks to this market, specialized companies have emerged that are responsible for providing account management services in forex, investment funds, and automatic systems.
Today it’s believed that the foreign exchange market (FOREX or FX) is the financial market with the highest growth projection in the modern financial world.
The Forex market lacks a centralized location; it operates as a global electronic network of banks, financial institutions and individual traders, all dedicated to buying or selling currencies under its volatile relationship of change.
5. Investment fund management companies
These companies act in the foreign exchange market to gain access to the financial markets of other countries and thus be able to invest in bonds, stocks, etc. on behalf of the participants of their funds.
What are Forex’s advantages?
- By not having bureaucracy nor a central market, the costs are also very low.
- Orders are fast and you can find a counterpart in a short time.
- The Forex market is transparent: it’s almost impossible to manipulate it, that’s why it’s very difficult to make forex scams.
- There is no restriction for trading: you can go long, bet short or sell in a few seconds.
- In the market, you can get liquidity 24 hours a day and, in the case of cryptos, all week.
- These accounts can allow you to operate with more capital than is available in the account. You can earn a lot of money trading Forex, no matter if you invest small amounts.
- Forex is not regulated. Therefore, we must be clear that Forex trading with currency exchange is a huge market that crosses countries and borders.
- There is no centralized market. There is nobody that can resolve the possible discrepancies that may occur. This lack of control in the market can cause some problems that don’t occur in other markets, such as the lack of information about the volume being traded or there may even be price differences.
- The danger of leverage: With a minimum deposit, you can make or “lose” a lot of money.
Can you use Forex to generate income?
Yes, of course you can.
But you must be very informed and operate only with Regularized Brokers, which are subject to the rules and regulations of Authorities recognized worldwide, and look after the interests of the clients, protecting them from irregularities and misuse.
In this way, you can avoid falling into forex scams, because although it is difficult to make them, it’s not impossible.
One of the great advantages of using this kind of platform is that you can make money by investing money.
But always remember to be wise and cautious with your financial investments.