The basis of forex trading is currency pairs - the pair of currencies you want to trade.
The most famous pair is the euro and the dollar - EUR/USD. This means that you either buy or sell euros. In exchange for dollars.
The principle is simple. If you expect the euro to go up or the dollar to go down, buy euros. And if you expect the opposite, sell euros.
One basic rule applies - if you really want to make money, forget about emotions, impressions and feelings. Instead, rely on facts and analysis.
There are countless currency pairs you can trade. They are generally divided into 3 groups:
| major currency pairs | cross currency pairs | exotic currency pairs |
|---|---|---|
|
There are 7 major currency pairs and they all trade in US dollars. They are:
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They are based on the major pairs, but unlike them, there is no US dollar in them. Typical cross pairs include:
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Exotic pairs include any that include a currency that you won't find in the main pairs. This includes any trading with Czech crowns. |
| spot market | forward market | term market - futures |
|---|---|---|
| It is the most important of all. It is where investors trade currencies at their current value. The current price is determined by supply and demand and depends on many factors. For example, GDP, the political situation in a country or unemployment. It is from the spot market that the forward market and futures are based. | In the forward market, instead of trading currencies directly, you are just trading contracts. In these, firms have a recorded claim on a currency, its price per unit and a settlement date. The exact terms of the transaction are determined by the individual parties. |
In the futures market, investors trade standardized futures contracts. Unlike forward markets, they are pre-determined, for example:
|
Like all investments, forex has its pros and cons. The main advantages include:
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Forex is not only the largest financial market in the world due to its daily trading volume, but it is also decentralised and not overseen by an exchange. That is why it is referred to as OTC - over the counter.
Anyone can easily enter it. But to really succeed, you have to put in the time. Because the basis of any good trade is thorough analysis.
| fundamental analysis | statistical analysis | technical analysis |
|---|---|---|
| Based on the current political and economic situation of the countries concerned. | Determines the economic performance of a country, such as GDP or interest rate. | Uses mainly historical data and tracks related charts. |
At the same time, don't forget to invest wisely and spread your money across different trades. For example, we minimise risk by putting less than 1% of our total capital into each investment opportunity.
And watch out for one more thing. The pyramids that are cursing forex.
Forex is not multi-level marketing where you get a discount for bringing in other traders. If someone offers you something like that, get away from them fast! He's probably only after your money.
To become a pro trader and learn how to really make money with forex, you need a few things. Apart from mastering the mentioned analysis and other technical matters, your psyche and ability to control your emotions are important.
It's often the one that decides whether you make money or walk away empty-handed.
And how to learn all this?
On our courses! We'll not only give you the basics, but also reveal the best tricks from our practice.
The first course is also free of charge. You'll see if you're really into forex and you won't risk anything.
