Forex is an international financial market where currency exchange takes place (from foreign exchange – “foreign exchange”). At the same time, until 1971, such a market simply could not exist, since the “gold standard” initially operated, and then the Bretton Woods system. With the advent of the Jamaican monetary system and the release of the course, significant fluctuations in rates have become possible. Profit on them and can be obtained by using for trading “stock exchange” Forex. In fact, the correct name of Forex is an international over-the-counter market, and due to the lack of a clear place for the passage of transactions, traders from different countries can participate in it.
Exchange Forex how to make money
To gain access to trading, you need to choose a reliable broker who will provide access to trading, as well as a convenient platform (software) for online trading. Also, for earnings you will need a “leverage”, which can be from 100 to 2000 or more. As a result, having deposited only 1000 dollars to the account with the leverage of 1 to 100, you can operate with a figure of 100 thousand dollars during the transaction. By selling and buying different currencies, you can either earn or lose on exchange differences. At the same time, good platforms have a large number of automatic indicators for analyzing the market, both technical and graphical (up to fifty), with which it is easier to navigate in the ongoing process.
Forex Exchange Hours
The operating time of the Forex “stock exchange” is strictly limited – any operations begin at 2 am on Monday, and finish at 2 am on Saturday. It seems that this is quite a reasonable restriction for especially ardent players who could analyze the situation and sell or buy currency almost 24 hours a day. All this time, profits or losses are incurred not only by speculators and investors, but also by banks.
The work can also be restricted by the most popular Forex brokers – dealing centers. By the way, at the moment the activities of such organizations in the Russian Federation are not subject to regulation and control.
Play Forex Trading
To play in the Forex market, study the “introductory data” – types of accounts, margin requirements of a broker, client documents. The accounts differ in terms of minimum deposit sizes (100 USD / EUR or more), available trading instruments (not only classical currency pairs, but also CFDs for metals, energy carriers, indices and stocks. Differ depending on the broker leverage (1 to 25 – 1 to 500) and many other parameters. By analyzing the data in time and assessing trends, it is possible to both acquire a growing currency (or other instrument) and sell in time decreasing in price relative to others.
Forex trading in the United States is legally regulated by the Government Futures Trading Commodity Commission. Rules of bidding and conflict resolution are managed by a non-governmental association (National Futures Association). The requirements of the American NFA are being fulfilled by traders outside the United States, as both private traders and funds avoid companies that do not meet the level set by NFA.
However, participants in Russia, Ukraine and Belarus are at their own risk and risk playing in the Forex market, since there is practically no state regulation in this area. In particular, the FS on the financial markets of Russia back in 2009 noted that the actions of participants in this market are not considered the activity of professional participants in the securities market. Consequently, it cannot be regulated by the Federal Law and legal acts.
And only in December 2014, a relevant law was adopted, clarifying the essence of the concept (as trading on the unorganized market), and allowing to protect individuals from fraudsters by requiring registration of a forex dealer in an SRO.
Forex Exchange for Newbies – Basics
The first thing that appeals to Forex is for beginners – the basics of trading can be found here. Before becoming a trader, it is important:
- choose a suitable broker to perform operations (he will provide both software and leverage);
- understand the terms, study the basic methods of analysis (fundamental – by country, technical – for specific operations);
- download software (terminal, most often – the appropriate version of Metatrader);
- try out the main types of operations in demo mode, and not on real money.
Tips experienced are:
- Trade not on schedule, but when you have a weighted, thoughtful decision.
- Do not read everything – choose the most important from reliable sources.
- Study trends, but do not concentrate on them.
- Consider action scenarios, do not rely on “sudden inspiration.” Know exactly when you stop the operation.
Difference between Forex and stock exchange
Since Forex is not an exchange, but an over-the-counter market, the difference between the Forex exchange and the stock exchange is enormous. The first and main difference – Forex does not have a specific country, city and address of work. In fact, this is a group of banks and other organizations united by a common system for conducting financial transactions. The second difference is that it is impossible to check the volume of transactions, therefore the indicators (indicators) traditional for the stock exchange do not apply here. The third difference is that private individuals cannot conduct their own operations on the stock exchange, and the turn of DCs (dealing centers) individual individuals can easily try themselves as traders.
Despite the specificity of this foreign exchange over-the-counter market, the advantages of Forex are:
- The opportunity to start with small amounts (up to $ 100) and try to work with a conditional demo account.
- Access to trade operations, even for private individuals (through DC).
- High turnover (estimated at several trillion dollars a day).
- High volatility (currency pairs overcome hundreds of points per day, making it possible to earn faster).
In addition, the “law of supply and demand” is directly applicable here – there are no restrictions imposed by real stock exchanges. You do not need to pay income tax – an advantage for beginners with small amounts. In reality, the currency does not move anywhere – which means there are no associated costs. The volume of the transaction is easy to increase (if it is successful) several times. You can work with Forex from anywhere in the world.
Forex exchange and understanding of currency pairs quotes
On the over-the-counter market, any currency is traded. However, the purchase / sale of each is through the other. If you are interested in Forex exchange and an understanding of currency pairs quotes, choose which currency you are going to trade. Nuances:
- Currency pair – any 2 currencies, one of which increases or decreases in relation to the other.
- The name encodes the direction of transactions: the base currency / quote currency. The base one is bought / sold, the quote currency measures the value of the “rate”.
- There are 4 main pairs: EUR / USD, USD / CHF (with Swiss franc), GBP / USD; USD / JPY (with Japanese Yen). They are called Majors.
- Up to 90% of transactions are made with the US dollar, 37% – euro, 20% – yen, British pound sterling – no more than 17% of all transactions.
- Maximum activity (and change in quotes) occurs when national banks change their rates. This time is called trading sessions.
Psychology of work on the Forex market
Before you begin to perform any action, it is important to understand what is the psychology of work on the Forex exchange. According to unofficial statistics, up to 95% of traders spend their money for nothing, without at least making any profit. The funds go to the accounts of dealing centers. Detailed training, planning, work strategy, clear analysis and premeditated schemes of actions, carrying out operations only with a full understanding of the current process are the main components of the psychology of work on Forex. Punctuality and pedantry in the implementation of their decisions – the only salvation for the “hot heads” and those who are prone to greed and thirst for quick money.
Note. Before working with any new currency, it is important to conduct a fundamental analysis – to study the state of the country, current processes and global trends, so as not to focus on short-term “differences” of quotations.
In general, the OTC Forex market is open 24 hours almost every day, except for a regulated weekly break. However, many people download applications or install software that shows certain periods – the opening and closing of trading sessions on world exchanges. At such hours, Forex deals are maximum in volume, and the spread – the gap between “ask” (ask) and “offer” (bid) – is significant. There are similar online services – they are less convenient because they do not offer alerts. At the same time in a good “clock” must be indicated:
- current quotes;
- support levels;
- stock indices;
- the course of the Central Bank;
- USD index.
Hours allow you to determine the opening and closing times of trading sessions in a particular time range.
Forex in Russia
The over-the-counter Forex market in Russia is represented by brokers – companies that organize work for traders. Many of them have been operating since 2008 and even longer. By virtue of the new law regulating the sale of currencies in 2016, officially providing access to the Forex market is not easy. Companies will have to:
- join the SRO (self-regulatory organization), contribute 2 million rubles. to the compensation fund;
- increase equity to 100 million rubles .;
- obtain a license from the Bank of Russia.
The conditions work only for legal entities registered in the Russian Federation. Therefore, the vast majority of brokers are companies registered in other countries (Malta, Mauritius, Cyprus, South Africa, United Kingdom, United States). As of January 1, 2016, Finam had an official license, and according to CRFIN, the documents for its receipt were submitted by major “players” – Alpari, Teletrade, Forex Club, Profit Group.