Answers to all frequently asked questions about forex trading »
If you’ve just been introduced to forex or as a fledgling forex trader adventuring in a new world, there is a lot to discover and a lot to learn. So, your mind simmers with questions about forex trading.
» I am no psychic, but here are answers to all questions about forex trading running in your mind. But first, a word of caution. Forex trading easily passes as an easy way to make money. It is not.
If you do not invest time in learning the craft of trading, you will be a statistic of the losing traders. And then, you will join in the chorus that forex is gambling -it is a scam.
» Before you pull a dime from your account to trade forex, make sure you’ve understood the psychology of trading.
What is forex?
Forex is short for Foreign Exchange. If you’ve exchanged your local money for another country’s money in a forex bureau, then you participated in a foreign currency exchange.
2. What is forex trading?
All types of trade involve the exchange of something. A restaurant will exchange a plate of fries for the $5 in your wallet or plastic.
In the currency market, you exchange money of one country for another country’s money for a profit when the prices of these currencies change.
» In the example of the British pound for the US Dollar – GBPUSD – a trader who anticipates that the pound will strengthen will sell the dollar to buy the pound.
If the prediction turns out to be right, they will sell all the pounds bought for the dollars. That way, they make a profit since they bought the pound at a lower price and sold it at a higher price. 3. How forex trading works? First, you open a trading account with a regulated and reliable forex broker. You will then deposit money and then start trading. Trading is basically clicking the buy and sell buttons on your broker’s platform. This sounds easy. Yes, clicking is easy. But the hard part is figuring out when to buy or sell and when to close a trade. The hardest part is managing your emotions while you trade and staying disciplined. 4. What drives the forex market price? Fundamental economic and geopolitical factors drive forex market prices. In essence, these include activities of Central banks, politics, wars, pandemics, and many others. Economic calendars are a great place to keep tabs on critical economic events likely to affect a particular currency pair. Technical aspects of speculators also move the forex market price. Because it is impossible to attach forex market movements to one factor, it is hard to predict price direction. 5. Where to learn forex trading? There are a lot of resources floating on the internet. But the best place I recommend for every new trader to learn forex trading is from www.babypips.com Do not skip education; if you do, you will be gambling in the market. 6. Is forex trading gambling? NO. It is only gambling if you have no clear strategy and trading plan. Don’t gamble with your money. Vegas gamblers will tell you the house always wins. 7. Is forex trading legal or legit? Yes, forex trading is legal in most countries. Some countries, however, have restrictions while others have banned forex trading. Countries, where it is illegal to trade forex, include: Israel, Belgium, North Korea, France, Bosnia Herzegovina, Malaysia and all countries with strict Sharia laws like Pakistan
8. Is forex trading worth it? Like every other venture in life, forex trading is worth it if you know what you are doing. 9. When forex do market open and close? Forex markets open Monday at 00:00 GMT and close on Saturday at 00:00 GMT. Once the markets open, they stay open 24/5 Monday to Friday midnight. 10. Who trades forex? Anybody with access to a computer or smartphone with an internet connection to a trading broker. 11. Is forex trading real? Yes, forex trading is real. 12. Can forex make you money? If you are disciplined, forex trading can make you money. 13. What forex pairs to trade? There are more than 80 trading pairs to trade. However, for a beginner trader, stick with the major currency pairs with the lowest spreads. These include EURUSD, GBPUSD, USDJPY, USDCHF, AUDUSD 14. Which forex broker is best? Exness, IC Markets, HotForex, Tickmill, and XM forex brokers are the best forex brokers for beginners. 15. Can forex make you rich? Yes, forex can make you rich, but only if you are a disciplined trader. 16. How forex leverage works? Leverage works by enabling a trader with a lot more money than they have on their trading account. Let’s say you have $100 in your trading account, with a leverage of 1:1000. It implies that you can trade with volumes worth $100,000. Leverage helps you make money and grow your account fast, but it will also destroy your account fast. Only trade with leverage that your trading system and strategy accommodates. Leverage kills. 17. How many forex trades per day? You can make as many trades as you wish and can in a day. But, overtrading is a bad habit. It is an emotional trigger that destroys accounts. 18. How forex brokers make money? Forex brokers make money from trading costs they charge traders when they make trades. The costs are the spreads and commissions. 19. What is a spread in forex trading? A spread is a difference between the selling price (Ask) and the buying price (bid) of a currency pair. It is built into the trade and charged when you place a trade. Because of this, it is vital to trade with forex brokers that have tight or small spreads. 20. How many forex trading days in a year? There are 250-253 trading days in a year, depending on whether it is a leap year or not. 21. How many forex trading days in a month? There are 20-23 trading days in a month. 22. Is forex trading 24 hours? Once it opens on Monday, it is open 24 hours a day up to Friday midnight. 23. What are the best times to trade forex? The best times to trade forex are the times when there is liquidity in the market. That usually happens in the UK, US market sessions. » Here are the trading sessions – GMT-4 » Sydney Open – 7:00 AM Sydney Close – 4:00 PM » Tokyo Open – 9:00 AM Tokyo Close – 6:00 PM » London Open – 8:00 AM London Close – 4:00 PM » New York Open – 8:00 AM New York Close – 5:00 PM 24. Why forex is bad? Forex is not bad; it is the traders who fail at trading who make forex look bad. If you are trading within the boundaries of your trading plan and strategy, you will always succeed. 26. How many forex traders are there? It is estimated that there are over 10 million forex traders in the world. 27. How much do forex traders make? It varies from trader to trader. Good traders make a lot, bad traders lose. 28. Which forex pairs move the most? EURUSD, GBPUSD, USDJPY, USDCHF, AUDUSD, and XAUUSD (Gold) 29. Which forex pair is the most volatile? Currency pairs with the Japanese yen are the most volatile – GBPJPY, AUDJPY, NZDJPY. 30. Why do forex traders fail? Simple, because they lack trading discipline. 31. Who created forex? There are wild guesses, but some think it is the Babylonians. Others believe it started over 500 years ago in Amsterdam. 32. Forex trading when to buy and sell? When the trading strategy signals you to buy or sell. 33. Who owns forex trading? No one does. Everyone is a participant. 34. Will forex trading ever end? Not unless the world comes to an end. For as long as people will need to trade between countries, forex trading will exist to facilitate business. 35. Will forex trading last forever? If you believe in the apocalypse and the end of the world, then forex won’t last forever. 36. Will forex trading be banned? No. Individual countries may ban or restrict it, but it is unlikely that they will collectively sit down to ban forex trading. 37. Are forex signals reliable? It depends on the source of the forex signals. Subscribe to our updates to receive daily forex forecasts for the pairs we are trading to guide your trading. 38. Why is forex trading good? It provides a disciplined trader the opportunity to participate in the largest and most liquid market in the world. 39. Can forex trading be profitable? Yes, it can be profitable if you are disciplined and follow your trading strategy. 40. Can forex trading make you a millionaire? Yes, forex trading can make you a millionaire, but only if you are disciplined and ready to trade for some years. Forex trading is not a get rich quick scheme. If you have that attitude, you will lose. 41. Where forex money come from? It is a pool of the money of all the traders participating in the market. This includes retail traders like you, institutional traders like hedge funds, and banks. 42. Can forex trading be a full-time job? Yes, it can be a full-time job. 43. How many forex traders are successful? There are very few successful traders. Why? Because most traders lack the discipline to create a trading strategy or to follow it if they have one. 44. Are forex gains taxable? It depends on your country. You can consult your local tax authority. 45. How forex pairs work? Forex is happening when there is an exchange between two currencies. For example, you have the Euro and you want to buy the Great Britain pound. An exchange will happen between the Euro and the Pound. We write this as EURGBP or EUR/GBP 46. How many forex brokers in the world? There are at least two hundred active and regulated forex brokers. But, they could be in thousands that are unregulated. 47. Why forex is important? Because forex enables global trade, to buy goods and services from another country, you have to use a common currency. Meaning you have to buy or sell your local currency to purchase goods and services. 48. Which forex trading platform is the best? MT4, MT5, cTrader. 49. How much is a forex trading course? It depends on who you are buying a trading course from. But, a free course from babypips.com is better than most of the courses you will shell a lot of dollars on. 50. Where to study forex trading? From www.babypips.com 51. How much capital for forex trading? It depends on the broker you are trading with. Some accept as low as $1. Others require a minimum of $50,000. I recommend one starts trading with over $1000 so that you don’t over-leverage your account, trying to turn $5 into a million in a week. 52. Why is forex trading better than stocks? I wouldn’t say it is better. Both can make you money. The only advantage forex has over stocks is that it is open 24 hours, five days a week. Plus, there is more liquidity – money – in the forex market than the stock market. 53. Why is forex trading hard? Because it is hard to tame and master the psychological aspects of trading. 54. Can forex trading be self-taught? Yes. Go to babypips.com, then select a broker and download their demo to start practicing forex trading. 55. Forex, where to set, stop loss? This depends on your trading strategy. But, it is good to place it just below the previous low for a buy order and above the previous high for a sell order. 56. Who controls the forex market? Regulatory organizations and central banks around the world have the most significant control over the forex market. 57. How many forex traders lose? More than 20% of retail traders lose. 58. How forex robots or EAs works? They automate the manual process of entering and exiting and even managing trades. 59. How many forex pairs are there? There are as many currency pairs as are the number of countries in the world. But, most brokers offer between 40 – 80 currency pairs on their platforms. 60. How often do forex rates change? Every second, for as long as the markets are open forex rates change 61. Which forex markets are open on weekends? All forex markets are closed on weekends. 62. Are forex demo accounts rigged? No, demo accounts are not rigged. What happens is that trading on a demo account is different from an emotional standpoint from trading a live account. You make fewer mistakes on a demo account, but when real money is on the line in a live account, the demons in your head jump out. So, it feels like demo accounts are rigged. 63. Are forex courses worth it? Most forex courses are not worth it. You are better off sticking with the free education programs your forex broker provides or take one for free from babypips.com then practice and practice with a demo account before you invest your money. 64. When to invest in forex trading? You can invest any time in forex trading. The markets are open Monday to Friday, January to December, except on Christmas day – 25th December and New Year’s Day – 1st January. 65. Which forex trading app is the best? All brokers provide you with a trading platform and mobile apps. Right now, MT4 is what most forex brokers use. 66. When are the forex trading sessions? » Here are the forex trading sessions – GMT-4 » Sydney Open – 7:00 AM Sydney Close – 4:00 PM » Tokyo Open – 9:00 AM Tokyo Close – 6:00 PM » London Open – 8:00 AM London Close – 4:00 PM » New York Open – 8:00 AM New York Close – 5:00 PM 67. Where to open a forex trading account? You can open a forex trading account with Exness, IC Markets, HotForex, Tickmill, and XM Tickmill and XM will give you $30 – for free – no deposit bonus for just signing up. You may also want to learn why these are the best forex brokers to trade with.