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What is forex? Top 10 Cryptocurrency Trading Basics

 Forex market currency trading

This educational article will highlight one of the terms we hear about a lot, especially on the Internet, which is the term FOREX market or the global currency market.

Forex market currency trading

What are forex, exchange market, and foreign exchange trading?

  • FOREX is an abbreviation of the term Foreign Exchange Market, which means the foreign exchange market and is also symbolized by the abbreviation FX
  • The forex market is one of the most well-known financial markets, and it is a massive financial market in which millions of investors, banks, and investment funds trade currencies for a variety of reasons, the most important of which is to profit from changes in currency exchange rates through buying and selling operations.
  • The forex market is decentralized and has no geographical boundaries where it is traded using the OTC system or trading outside the platform, thanks to technological advancements and the spread of the Internet and modern means of communication. The forex market is decentralized and has no geographical boundaries where it is traded using the OTC system or trading outside the platform.

How did the forex market start? The genesis of money

  • Forex was founded on the notion of barter, in which people used to trade by bartering things with one another because there was no cash or banknotes available at the time.
  • The barter system was the fundamental component of the money trade system. Then people utilized what they considered valuable in trade operations, such as snails, precious stones, and other trade activities, to define the value of the product by a specific number of these media, such as buying meat in exchange for four snails.
  • Soon these media were replaced by pieces of gold, silver, and precious metals, and then people tended to use paper currencies as an alternative to gold and silver so that banknotes would be printed expressing a certain amount of gold, and this was the beginning of the emergence of money that we know today.

What is the size of the FX market's trading volume?

The forex market is the largest financial market globally in terms of liquidity and trading volume reached 6.6 trillion dollars per day in April 2019, equivalent to 25 trillion Saudi riyals per day. Forex cannot be compared to any other financial market in terms of liquidity

For example the New York Stock Exchange (NYSE), which is the largest stock market in the world, with a daily trading volume of only $70 billion.

Who trades the forex? What is the reason for its huge liquidity?

This huge liquidity in the currency market is due to the presence of different categories of traders such as major investment banks, central banks, investment funds, investment management companies, brokerage companies, individual traders, and traders for non-financial purposes such as hedging purposes, in addition to the development of means of communication and online trading


And the use of financial facilities or leverage to trade in forex is attracting an increasing number of investors to the currency market every day.

Is forex trading good for you? Learn about the benefits and drawbacks of forex trading.

The currency market's most essential characteristics are:

  1. Forex has a lot of liquidity and a lot of trading volume.
  2. Forex trading is open 24 hours 5 days a week
  3. Forex trading is done in a decentralized manner - OTC
  4. The forex market is simple to follow, and currency news is kept to a bare minimum.
  5. The possibility of making a profit during the rise or fall of currencies
  6. The possibility of trading with small amounts thanks to the financial leverage
  7. Opening a real FX account is simple.

Disadvantages of the currency market

  1. The degree of volatility and price activity
  2. high risk
  3. Weak supervisory or regulatory side

When is it possible to trade forex? Working and trading hours on the forex market

The forex market is a decentralized market that operates through various means of communication around the world without a specific geographical headquarters as a center for trading

The market operates 24 hours a day, five days a week, from the start of trading on Monday to the end of Friday, and the market is closed on Saturday and Sunday as a global weekend.

The forex market is divided into four trading periods: American, European, Asian, and Australian. As a result, trade does not halt throughout the day because these intervals overlap and carry over to the next day.

The current trading period can be identified by entering forex market hours: Best Hours for Forex Trading.

What currencies are there in the forex market? What is the meaning of currency pairs?

In forex, what currencies are traded? As previously stated, forex is the foreign exchange market, and traders trade on the currencies of countries. The most well-known of these currencies are the currencies of major countries with economic weight, and special attention is often paid to the following eight currencies, which are considered the most important and most traded among the world's currencies:

  1. The US dollar is the currency of the United States of America.
  2. The Euro is the currency of the European Union.
  3. GBP - the currency of Britain.
  4. JPY - The currency of Japan.
  5. Australian dollar AUD - the currency of Australia.
  6. New Zealand dollar NZD - the currency of New Zealand.
  7. Canadian dollar CAD - the currency of Canada.
  8. Swiss Franc CHF - the currency of Switzerland.

Pairs trading in the forex market

The pairs system is used in the forex market, where all two currencies are united into one pair to trade one currency against the other. It refers to the sale of one currency in return for the purchase of another at the same time, implying that each currency pair contains two currencies, a base currency and a counter currency. An exchange rate is the amount of the base currency that must be paid in order to get one unit of the counter currency. as an example:

To obtain one euro, you must pay 1.17189 US dollars, i.e., one euro is worth one dollar and seventeen cents.

the presence of the selling price and the purchase price, which is very similar to what we see in the stock market in terms of the presence of the asking price and the offer price, as the purchase price represents the price at which the purchase will be executed, while the selling price represents the price at which the sale will be executed, and as you can see, there is a small difference between the selling the buying price and the selling price, and this is very similar to what we see in the stock market in terms of the

What are the forex basics you need to know before you start trading forex?

Before trading forex, there are a few fundamentals that you need to understand:

  • Forex traded currency pairs
  • Spread, or the price difference between purchasing and selling is referred to as a spread.
  • What is a pip or pip and how do you calculate profits and losses in forex?
  • The manner of buying and selling, the magnitude of the transaction, and the currency contract are all factors to consider.
  • What are leverage and margin in forex?
  • What is a Margin Call or Stop Out?

How do you get started in currency trading?

The currency trading market is a huge market open to everyone, and you can easily start trading currencies by opening an investment account with a forex company or brokerage company. Brokerage companies offer individuals the ability to trade in large amounts compared to their deposited capital through leverage or margin trading. To trade FX, a person must be able to:

  1. First: Learn the basics of forex trading and the most important forex terms.
  2. Second: Learn how to use the forex trading platform.
  3. Third: Learn to analyze forex and currency price movements.
  4. Fourth: learn capital management in forex.
  5. Fifth: Make a plan to trade forex.
  6. Sixth: Trade with a demo account before risking real money.
  7. Seventh: Choosing the best forex broker and opening a real account.

This question always comes to mind!

Is currency trading profitable? And what are the risks of currency trading?

Currency trading is characterized by its flexibility compared to trading stocks in terms of risk management. A trader in the currency market can achieve very high returns whenever he decides to increase the risk more, as currency trading is often done using leverage and the margin system, which doubles the amount of money traded compared to its real value, and this causes the risk of investing in the currency market. So you should make sure to learn currency trading well before you start and only trade with redundant funds.

Frequently Asked Questions:

What is forex?

What is known as FOREX is the foreign exchange market, which is one of the most famous and largest financial markets and the largest in terms of liquidity. Forex is traded through currency exchange and takes advantage of the price differences between buying and selling.

Who trades the forex?

Forex is traded in many categories such as major investment banks, central banks, financial and investment institutions, wealth management companies, private companies, and individuals.

How do I trade forex?

Individuals can trade in forex through licensed brokerage companies, where the trader opens a trading account for him in the brokerage company, and the broker will provide him with facilities or financial leverage that enables him to trade in the market times the deposited capital.

What is the best forex broker?

There are many criteria and considerations for choosing the best forex broker, for example, that the broker is licensed by a reliable regulator, the company’s management is experienced in the market, offering competitive rates and commissions, and other criteria and this article explains in detail how to choose a suitable forex broker.


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