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What is Forex? Everything you need to know about the market

Creation date: Mar 22, 2025 10:00pm     Last modified date: Mar 22, 2025 10:00pm   Last visit date: Apr 2, 2025 10:57pm
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Mar 22, 2025  ( 1 post )  
3/22/2025
10:00pm
Keny Bảo (kenybao): edited 3/22/2025 10:05pm
Forex, short for foreign exchange, is the largest financial market in the world. It involves the trading of currencies and operates 24 hours a day, five days a week. With a daily trading volume exceeding $7 trillion, Forex is an essential component of global finance. Whether you are an investor, trader, or just someone interested in financial markets, understanding Forex is crucial.
In this article, we will delve into everything you need to know about the Forex market, including how it works, key participants, trading strategies, and risks involved.

What is Forex Trading?

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Forex trading refers to the buying and selling of currencies with the aim of making a profit. Unlike stock markets, which trade company shares, Forex focuses on exchanging national currencies. These transactions take place over-the-counter (OTC) through a global network of banks, brokers, and financial institutions.
The Forex market operates in currency pairs, meaning you always trade one currency against another. Some of the most popular currency pairs include:
  • EUR/USD (Euro/US Dollar)
  • GBP/USD (British Pound/US Dollar)
  • USD/JPY (US Dollar/Japanese Yen)
  • USD/CHF (US Dollar/Swiss Franc)
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How Does the Forex Market Work?

The Forex market is decentralized and operates through three main trading sessions:
  • Asian Session – Led by Tokyo, this session sees trading from major Asian markets.
  • European Session – The London market is the biggest contributor in this session.
  • American Session – The New York market dominates Forex trading during this period.
Because of these overlapping sessions, Forex trading is active 24 hours a day. Prices fluctuate due to various factors, including economic news, geopolitical events, and central bank policies.

Key Participants in the Forex Market

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Several entities participate in the Forex market, each with different objectives:

Retail Traders

Individuals who trade Forex through brokers, aiming to profit from currency fluctuations.

Banks and Financial Institutions

Banks engage in Forex trading to facilitate international transactions, hedge risks, or for speculation.

Central Banks

Governments use central banks to regulate monetary policies, which influence currency values.

Corporations

Multinational companies trade Forex to manage risks associated with foreign currency transactions.
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How to Start Forex Trading

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  • Understanding Forex basics, technical analysis, and market trends is crucial before investing real money.
  • Look for a broker regulated by reputable financial authorities like the US Commodity Futures Trading Commission (CFTC) or the UK’s Financial Conduct Authority (FCA).
  • Select an account type that suits your risk tolerance and investment goals.
  • Create a plan outlining entry and exit points, risk management techniques, and position sizes.
  • Most brokers offer demo accounts, allowing traders to test their strategies before using real money.
  • Once confident, start trading with a small amount and gradually increase exposure.
Forex is an exciting and dynamic market offering opportunities for traders and investors worldwide. While it provides significant potential for profit, it also carries inherent risks. By understanding how Forex works, choosing the right trading strategies, and implementing risk management techniques, you can navigate the Forex market effectively.
Contact information:
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  • Phone number: 092 635 8988
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