Forex trading is the world's largest financial market, with an average daily trading volume of 5.46 trillion US dollars. Forex trading involves buying one currency while simultaneously selling another, so it is always traded in pairs. Forex quotes also fluctuate continuously based on the relationship between market demand and supply.
The common ways to make money are generally to "buy low and sell high" or "sell high and buy low". Since IRC provides leverage, you can participate in the Forex market with less capital and potentially earn higher profits.
The Forex market is regarded as the fairest and most transparent market on Earth. The primary reason is that due to the large number of market participants, its enormous scale, and trading volume, no single country or bank can fully control the direction of a currency.
The Forex market has no fixed physical location and is an over-the-counter (OTC) market. Unlike futures and stocks, which are traded on exchanges, Forex trading is conducted through over-the-counter transactions among banks, governments, hedge funds, or individual investors, typically via electronic communications. It is tradable 24 hours a day, 5 days a week.
The main participants in the Forex market are central banks, commercial banks, and investment banks. However, in recent years, the development of the Internet has had a significant impact on the Forex market, greatly increasing the number of participants. Currently, Forex trading participants also include large multinational corporations, fund managers, registered brokers, currency brokerage firms, and individual investors.
The Forex market is a 24-hour market, with each trading day shifting from Wellington, New Zealand to every financial center around the world. Most of the Forex trading here takes place in Tokyo, London, and New York. The Forex market opens at 10:00 PM Greenwich Mean Time (GMT) on Sunday evening and closes at 10:00 PM GMT on Friday afternoon.
The most liquid currencies generally come from countries with stable domestic politics and well-respected central banks. These currencies paired with the US dollar are usually called "major currency pairs". In the Forex market, the trading volume of these major currency pairs accounts for 85% of the total. Examples include EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, and USD/CAD.
There are various fundamental or technical factors that can lead to fluctuations in Forex exchange rates. Generally speaking, the most common factors causing exchange rate fluctuations are interest rates, inflation, and political stability. Sometimes, governments may sell or buy a currency in the open market to influence its value in order to meet the needs of domestic economic development. This is also called "open market operation", which may have a certain impact on currency trends in the short term. However, due to the diversity and large scale of Forex market participants, there is no single factor that can have a long-term impact on the Forex market to move in a single direction.
There are various risk management strategies to control risks in Forex trading. Among them, the most commonly used are Stop-Loss (SL) and Limit orders. Stop-Loss can be set directly on the MT5 platform; by setting the amount of loss you can bear, you can avoid large-scale risks. Limit orders are executed in the same way as Stop-Loss orders but allow setting a higher target price.
Forex traders usually adopt technical analysis or fundamental analysis strategies. In recent years, technical analysis has become increasingly popular. Technical traders make short-term or medium-term trades by judging trend lines, support levels, and resistance levels. Some traders, on the other hand, make trades by interpreting economic information, such as news, government reports, economic data, and even rumors. Additionally, some speculators are interested in unexpected events beyond fundamentals and policies. These unexpected events, such as central bank interventions, interest rate changes, political events, and even wars, have a significant impact on market trends. Once opportunities are seized, substantial profits can be gained.
No, Forex trading has never been so affordable as it is now. Traders only need to apply for an account and deposit a small amount of US dollars to start trading. Leverage of 1:100 can amplify traders' profits; however, it will also accelerate traders' losses at the same time.
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Risk Warning: Trading Contracts for Difference (CFDs) and other leveraged products involves high risks and may not be suitable for every investor. High-leverage trading has both advantages and disadvantages. Before deciding to trade, you should carefully consider your trading objectives, level of experience, and risk tolerance. Your losses may exceed your initial investment, so it is not recommended to invest funds that you cannot afford to lose. Before starting to trade, you should understand all risks associated with Contracts for Difference (CFDs). If you have any doubts, it is advisable to seek advice from your financial advisor and read the risk disclosure summary.
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