What is forex trading – Enab Baladi

editorial announcement

Forex is one of the largest currency trading markets around the world, and is based on the idea of ‚Äč‚Äčtaking advantage of price fluctuations in the exchange markets, where traders buy or sell one currency in exchange for another, taking advantage of changes in exchange rates between a pair of currencies.

The Forex market has the largest trading volume in the world, with more than 5 trillion USD in currencies traded daily. This is a very dynamic and highly liquid market due to the fact that currency rates change very quickly depending on market news, political conditions and major economic events. Since the currency markets are a reflection of political and economic events associated with different regions around the world, forex traders can take advantage of this to trade frequently.

What is forex trading based on?

Forex trading is similar to buying and selling other types of securities such as stocks. But the main difference is that forex trading is done by profiting from the differences in the exchange rates of currency pairs against each other, such as the euro against the US dollar or the Japanese yen against the pound sterling. Therefore, the profit is via Forex if the currency you bought moves against the currency you sold.

What is the average profit of forex trading?

This question gets asked a lot especially when a trader first enters the world of forex trading. There is no definitive answer to this question but there are various criteria that can be taken into account to calculate this average by analyzing the trading methods provided by the forex market.

We can say that on average a professional trader can get a monthly profit of 5% to 7% but excluding periods of decline and without accounting for taxes and with a starting capital of about 1700 GBP or the equivalent in other currencies.

The profit margin goes up exponentially with day to day operations, but it takes a lot of training and commitment. The more you stick to the right forex speculative strategies, the greater your chance of profit even with a modest investment.

The forces that move the forex markets

Like most other financial markets, supply and demand primarily control price movements in the forex markets. Big investors and banks are pumping capital into the economy with the strongest potential.

If good news about a particular country’s economy spreads in the markets, investors will be encouraged to put more money into it, increasing demand for its currency.

If there is no corresponding increase in other currencies, higher demand will cause the price to rise. Conversely, bad news can prevent investors from injecting money and this in turn will lead to a drop in the price of the currency. Therefore, it can be said that the value of a currency reflects the economic situation of the country it represents.

Forex trading vs stock trading: which is more profitable?

When comparing forex trading vs stock trading to understand which one is more profitable we will notice that forex trading has more leverage but less regulation compared to stock trading, which makes it very profitable but also risky. Monitoring the forex market is often easier than observing the stock markets because there are only 18 common currency pairs to trade for thousands of stocks around the world. But one of the disadvantages of forex trading compared to stock trading is that the exchanges take place throughout the day and this means that you may have to work at inappropriate times.

Forex and stock trading are very different types of trading operations so you should choose wisely between them based on your goals, disposable income and risk tolerance.

In conclusion, we advise you to take careful steps when entering the field of forex exchange so that you can do it well. Start with small amounts as you learn so you don’t lose everything you have due to unexpected mistakes. As you gain more experience, you will be able to increase your capital and thus reach higher profits.

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