Forex Trading: A Beginner’s Guide is the act of speculating on currency market price movements with the aim of making a profit. It is the largest and most liquid market in the world. While many people exchange currencies for practical reasons, such as travelling abroad, the vast majority of forex trades are made with the intention of making a profit from correctly forecasting price movements.
The key to successful forex trading is learning and understanding the market, which includes having a detailed plan of action before risking any of your own money. The plan should include profit goals, risk tolerance level and evaluation criteria. It is also important to understand leverage, as failure to manage risk is one of the main reasons beginner traders lose money.
Surviving the Forex Jungle: Key Principles of Risk Management for Traders
All forex trades are executed in pairs, meaning you buy (long) or sell (short) one currency against another. The most popular pair is the euro versus the US dollar, or EUR/USD. Each currency has two prices – the buy price and the sell price – which are determined by supply and demand in the market.
The higher the demand for a particular currency, the more valuable it is. This can be driven by events such as political instability, interest rate policy or even natural disasters. To gain a better understanding of how these events can affect the value of a currency, you should research fundamental analysis.
