Forex market trading is becoming the most popular form of trading in the world, not only for individuals but also for institutions. The reason behind it is that this particular market has no boundaries and there are no limitations on who can trade, where to trade or when to trade. Anyone who might be interested in making profits from foreign currencies can enter into forex trading.
Of course, success mostly depends on one’s knowledge about how to trade forex successfully. Therefore, if you are thinking of entering into this field then here are some fundamental points which you should know about the Forex market:
1-How Is It Different from Other Markets?
The foreign exchange market (aka forex market) involves trading a currency, which is why it is also known as the FX market. Currencies are the unit of exchange for any country’s economy and they can be traded on their own or in pairs. For example, if you wish to buy the Euro then you need to purchase it with another currency (the most common currencies used are USD, GBP, AUD, etc.) So when you decide on buying an EUR/USD pair then you decide that at this time I will buy one euro for 1.3 dollars or vice versa (EUR/USD=1.3).
The forex market has no central marketplace (which means there is no physical location where trading takes place), but instead, all trades take place over electronic networks between traders around the globe. A computer monitor allows you to view buy and sell orders on the screen, which are called limit orders if they are for buying or selling. It’s important to remember that currencies can be bought by anyone at any time – there is no ‘opening’ or ‘closing’ of markets in the way there would be with traditional markets.
2-How Does One Start Trading in Forex Market?
The forex market is a 24-hour market where traders from around the world trade currencies either directly through a broker, bank, or other dealers/market makers, etc., or over an online trading system such as MetaTrader 4 (MT4) developed by MetaQuotes Software Corp. The good thing about this type of trading is that you can trade any pair of currency 24 hours a day. With MT4, traders can display 10 currency pairs on one screen simultaneously so they can quickly analyze the price movements in all major currencies at once.
About the specific types of orders, transactions are settled on a T+2 basis which means 2 business days after the order is placed at your Saxo FX broker UAE for both USD and foreign currencies. Types of orders include market orders (to be executed immediately at the current market price), limit orders (which specify an execution price), stop loss/stop entry order (to protect existing positions), etc. Besides that, several key factors determine where your position will be filled or what the next quote will be based on certain factors such as the last traded price, support and resistance levels, and volatility.
3-Which Are the Most Important Factors for Success In Forex Trading?
Several factors can determine whether you will be successful or not in forex trading. These factors include:
1) Your analysis
2) Your level of commitment
4) Market conditions
But we should also know that luck is a small factor, and it is built upon the other three major factors which we mentioned above: analysis, commitment, and discipline. Of course, none of these factors guarantees success but if one has all four together then they can achieve great results.
Analysis has to be done far ahead of time to determine which currencies are gaining or losing value against each other. The more you know about the market conditions, the better your analysis will be. The second important factor is your level of commitment. If you are not committed, then it will be really difficult for you to succeed in forex trading regardless of how strong your analysis abilities are! It is very important that you have a businesslike approach towards the market, and this includes being fully aware of all risks involved with trading money/currencies etc.