What is Forex?

What is Forex?        

In simple terms Forex means foreign exchange. It is the over the counter showcase in which the outside monetary standards of the world are exchanged. It is considered the biggest and foremost liquid market in the world.

In simple terms Forex is basically the market for currencies. Including all the transactions such as buying and selling currencies. As an example imagine you want to travel from Sri Lanka to France. You will have to exchange your domestic currency (Sri Lankan rupees) for the France currency (Euro). As you've exchanged one currency for another you have already taken part in the Forex market.

According to the international standard for currency codes every national has a unique three-letter currency code. The first two letters represent the country and third, the letter identifies the currency.

Following table shows some of the most commonly treated national currencies, countries of origin and ISO 4217 codes used by Forex traders.

Country or Block	National Currency	ISO 4217 CODE
The European Union	EU euro	EUR
United States	U.S dollar	USD
Japan	Japanese yen	JPY
Great Britain	British Pound sterling	GBP
Australia	Australian dollar	AUD
Canada	Canadian dollar	CAD
New Zealand	New Zealand dollar	NZD

How does it work and how to make profits??

Currencies are traded in pairs. As an example take EUR/USD.EUR, the first currency in the pair, is the base and USD, the second, is the counter. This means the number of dollars you will receive for one Euro you are trading. The main currency used for Forex trading is the US dollar.

Forex market is driven by supply and demand. All the currencies are affected by many factors such as political, economic, news, inflation etc. Because of these factors value of a currency can be overvalued or undervalue for a certain period of time compared to another currency. The trick is buying currencies when they are undervalued and selling it when it gets overvalued. Today between $ 4 to 5 Trillion are traded in the Forex market each day, and that's how it has become the largest financial market in the world. The market does not open every day it works 24 hours a day from 5.00 PM EST on Sunday until 4.00 PM EST on Friday.

Who are the Forex brokers?

Forex brokers are the firms that provide traders to buy and sell currencies. All the transactions are happening here are between two currencies. (Ex: GBP/USD). They operate as a middlemen between traders and the market. Because of the development of technology they do not appear like middlemen. It allows you to interact with a broker via a trading software. Before starting to trade, a Forex broker will require the customer to deposit money. They also provide leverage so that customers have the possibility to deposit huge amounts.

What is Leverage?

Leverage is the ability to use a little thing to regulate something huge. Likewise using the leverage, even the trader has a small asset in his account he can use to control a huge amount in the market. This is known as "trading on margin". Every broker offers out leverage supported by their rules and laws. The amounts are sometimes 400:1, 200:1, 100:1 and 50:1.

As an example 50:1 means for every $1 in the trader's account, the trader has an ability to place a trade worth $50. If the trader has $100 in his account he would be able to trade up to $5000 using 50:1 leverage. Using high leverage may cause to a considerable amount of loses or considerable amount of profits. And it depends on the trader's risk management and the actual vision of upcoming market moves.

Shaun Benjamin

At the age of 21 he made his first million through Forex trading. Not at all like Shaun Benjamin who through trial and errors made his first million after mastering the art of trading in Forex. And also he's the founder CEO of Benjamin investments group. He is a qualified miner and property investor. Born into a middle-class family and raised by a single mother, Benjamin clarified that being raised by a single mother was not easy. In 2012, Benjamin was selected to study an Engineering Course.  Unfortunately, due to budgetary limitations, he couldn’t proceed with his ponders and had to drop out. But he made himself to successfully master in the art of trading Forex.

"I never wanted to work for someone, I've always been taken by the idea of being my own boss and being financially free"-Shaun Benjamin.

To obtain it he started trading Forex. And also started Benjamin Forex academy to teach others the skills he got. Benjamin's forex academy is a nonprofit training center in South Africa.

It's rare for people to become hugely successful traders. Most people stop once they start. All you need is to practice trading strategies before you enter the real market. For this, all platforms today give the option to practice on demo accounts instead of jumping in and risk losing your money. You can first familiarize yourself with the platform and the tools available. All the charts are going like to the real charts and the only difference is we are not using real money. From this, you can have a better knowledge of trading Forex. Once you have more Knowledge on Forex Trading and you understand how to place trades and how to manage your risk, then you will be ready to open a live trading account. The amount you start with is completely up to you but the minimum is 100 Euros, GBP or USD.

Because of slowly changing rates global Forex market is stable than the stock markets. Different kinds of participants trade in the Forex market such as Government central banks, Commercial banks, Investment banks, Brokers and dealers, Pension funds, Insurance companies, International corporations and Individuals. Some of them trade to make profits, some need foreign currency to pay for goods and services and some trade to hedge their risks.

  

It doesn't matter whatever the profession you do. Anybody can become a Forex trader but everybody can't make profits there. If you are sure and disciplined you can make create it happen. Following skills may help you to achieve your future goals in the Forex market.

Ability -   to accept loses without being emotional.

Confidence - to be of the same opinion in yourself and your trading strategy

Dedication - to become the best Forex trader

Strong analytical skills- to analyze data quickly and to identify the math involved in currency trading.

Discipline - to remain assuage and unemotional in a realm of constant temptation (space)

Flexibility – to conform to changing conditions successfully

Focus - to stay concentrated upon your trading objective and to not stray off course

Organization - to produce and reinforce sure trading habits

Realism - to not think you are going to assume wealthy fast and believe the realism of the push and trading

Record keeping- to find out the real progress

It takes time and Discipline to become a successful trader. And also the trading fashion might end up making the difference between losses and profits.