Understanding the fundamentals of the forex market will provide you with a solid foundation upon which to build your skills, trading strategies and even work towards a successful forex trading journey. So, let’s start the path with our Beginner Trading Guide. Juno Markets aims to provide resources for traders of all levels to learn and succeed.
The foreign exchange, also known as Forex or the FX trading, is the process of buying one currency and simultaneously selling another. This process can be performed for a variety of reasons, including commercial, tourism, and to enable international trade.
Before the internet, FX trading was only reserved for banks, large corporations, or high-net-worth clients who traded with a broker over the phone. As the internet age came about in the late 1990s, online trading became possible for everyday individuals.
In Forex, currencies trade against each other as exchange rate pairs. For example, EUR/USD is a currency pair for trading the euro against the U.S. dollar. Traders attempt to profit by buying and selling currencies by actively speculating on the direction currencies are likely to take in the future.
Forex is traded 24 hours a day, 5 days a week, by banks, institutions, and individual traders. Because of the global reach of trade, commerce, and finance, forex markets are the world’s largest and most liquid asset markets.
With a daily turnover of $6.6 trillion, FX trading is 25 times larger than the US stock market, which has a daily volume of $250 billion.
Market participants use forex for several reasons, including hedging against international currency and interest rate risk, speculating on geopolitical events, and diversifying portfolios. Take a look at the chart below to see how Forex compares to Stocks.
|Leverage||Up to 500x||Up to 2x|
|Starting Capital||$100 USD||$5,000 USD|
|Trading Hours||24 hours||8 hours|
|Number of Instruments||7 major currencies||Thousands of stocks|
|Subscription Cost||Free||Pay for quotes and charts|
The easiest way to get started is by signing up for a free demo account. A demo account gives you virtual money to practice trading.