Best definition of Forex trading
Currency trading defines Forex trading or foreign exchange trading in the name of FX, which is a decentralized global market where trading and exchange currencies in different parts of the world according to currency exchange rates, the Forex market is the largest and most liquid market where the currency exchange rate exceeds The daily has $5 trillion, which is a very large rate; as all global equities combined do not approach this volume of trading, The Forex market is easy the process of buying and selling currencies around the world, the mechanism of business is to make a profit by selling currency in case of high prices, and buying coins Low, it should be noted that there is a high degree of risk from exchange transactions that may result in significant losses to currency traders.
The currency is of great importance to the lives of individuals in different parts of the world, where the individual needs to exchange and transfer from one currency to another in order to conduct business different, for example, if a French tourist wants to buy a commodity from Egypt or to pay to see the pyramids in Egypt, you will not accept the coin of the French there, since he must convert the euro into the Egyptian pound, which is the currency accepted in Egypt, so he will exchange the currency according to the price Egyptian pound at the time, it can be measured by different positions and different business, and as such shows the main reason for the market exchange Currencies are one of the largest and most liquid financial markets in the world, the need for people to exchange currencies is what makes it so important.
One of the most important things that characterize exchange of currencies is that there is no centralized market for exchange of cash; currencies are traded electronically online, various transactions occur between currency traders worldwide using computer networks, the market is open 24 hours a day, and are Exchange and circulation of currencies in each region in accordance with their time-limit, for example, at the end of the United States trading day, the Tokyo trading market starts again, and currency exchange rates are constantly changing.
History of currency trading
In 1876 m the idea of fixing the world currency by tying it to gold price, began to apply what is known as the gold Standard, and was based on the consolidation of all hard gold paper coins, the idea was theoretically good; it only resulted in stagnation and recession Economically, in practice, leading to the drop of this principle, and despite the low price of gold, it has already been canceled and the idea was at the beginning World War II, where European countries did not have enough gold to support paper coins that were printed in large quantities For large military funding.
In 1944, a decision was made to establish fixed exchange rates for foreign currencies, and the United States dollar is the only currency that will be supported by gold, known as the Bretton Woods system (English: Bretton Woods), in 1971 the United States of America declared that it would not support I did it in gold, so I stopped exchanging gold for the US dollar, decided not to tie it to the gold price and ended with the Bretton Woods system, and in the year 1976 foreign exchange market or foreign exchange market, which resulted from the global acceptance of foreign exchange rates, while trading Using the Internet has only begun by the mid-1990s.
Currency trading destinations
Multiple currencies, including
Banks: Banks trade currencies every day in large quantities, some banks can deliberate billions of dollars a day, currency is sometimes traded on behalf of customers, and some traders trade currencies for the bank’s own account.
Individuals: Individuals participating in the foreign exchange market through the exchange of funds while traveling to another country for any purpose; whether at the airport or at the bank.
Companies: Different companies use the foreign exchange market to trade currencies and deal with other companies in different countries, in order to sell or purchase of goods, or the provision of certain services to the other, it should be noted that an important part of foreign exchange market activity is sourced from companies That exchange currencies to deal with different destinations in other countries.
Investors: Investment companies involved in managing the financial portfolios of their customers need to use the foreign exchange market to facilitate their own transactions related to foreign securities.
Governments and central banks: the Central Bank of a given country has an important role to play in the foreign exchange market; it can be the reason for the increase or decrease in the currency value in the same country; by trying to control interest rates, either to stabilize the market, those States could use the precautions Owned by foreign currencies.
Forex trading skills
Below are some of the skills that one needs to reach its goals in the Forex market.
- full confidence in the ability to achieve objectives through the pursuit of a particular strategy.
- Flexibility in forex trading, adapting to changing conditions for success in achieving goals.
- The ability to accept a loss if this occurs. Dedication to work, so that the individual can become a professional Forex trader.
- Be patient while pursuing a specific forex trading strategy. Focus to stay on the set plan and do not deviate from the specified path.
- The ability to organize and walk on positive business habits. Consider the exchange market in a logical and objective manner.
- Realism in dealing with the exchange market and the lack of an individual’s tendency to become rich quickly, so that problems do not occur during currency trading.
- Be smart and stay informed, and follow the market events first Powell.
- Control and not the excessive trading volume to avoid some unwanted things.