In recent years, the foreign exchange market at home and abroad has seen tremendous annual growth, with forex brokers, practitioners, market size, and investor numbers showing an explosive trend. Many investors, burdened with the task of making money, have felt a “spring heart” for forex at some point, but have also found it too mysterious and unpredictable. Now, let the 4E editor take you behind the mysterious veil of forex.
What is Forex?
First and foremost, let’s understand what forex is. Forex mainly refers to foreign currencies, including payment methods represented in foreign currency used for international settlements. These currency transactions create rates, known as exchange rates, which are the exchange ratios between different currencies. Exchange rates are determined by the supply and demand relationship in the forex market, but governments may also intervene. Exchange rates in the forex market fluctuate in real-time as currencies are exchanged between different countries, causing prices to constantly fluctuate. This volatility provides investors with the opportunity to profit from the price difference.
The History of Forex Development
The history of the forex market is ancient and complex. It originated in the Middle East to facilitate more effective third-party settlement methods, and international banks emerged in history to meet the trading needs between non-national individuals and institutions. Later, the forex market went through different periods such as the gold standard, gold exchange standard, Bretton Woods system, Smithsonian Agreement, and Jamaica Agreement. In the 1980s, with the development of computers and related technologies, cross-border capital flows accelerated, connecting markets across different continents into one entity.
Today, the forex market has become one of the most liquid financial markets in the world. Its daily trading volume has rapidly increased from around $70 billion in the mid-1980s to the current $5.1 trillion, which is four times the global GDP, 12 times larger than the futures market, 27 times bigger than the stock market, and 53 times larger than the New York Stock Exchange’s trading volume. The main participants in the forex market include central banks, forex banks, forex brokers, as well as individual and corporate entities.
The Essence of Making Money in Forex
The essence of making money in forex lies in profiting from the fluctuation of exchange rates. The exchange rates in the forex market are constantly changing, with currency exchange rates between different countries fluctuating. Investors can profit by buying a currency at the right time and selling it when the exchange rate rises, or selling when the rate drops and then buying back at a lower rate. This difference trading is the core of the forex market, allowing forex investors to earn money from the market itself. With a huge daily trading volume, the global forex market has a daily trading volume of up to $6 trillion, where various participants trade, including individual investors, central banks, and institutions, providing investors with ample opportunities but also accompanying risks that require cautious and wise decision-making.
Comparison of Forex with Other Investment Products
Compared to other investment products, forex has several distinct advantages that make it an increasingly popular choice for investors:
Low trading costs: Forex trading has no stamp duty, high commissions, or intermediary fees, making it relatively low-cost.
Equal profit opportunities in rising and falling markets: The forex market allows investors to buy or sell when the price of a currency pair rises or falls, providing profit opportunities as long as the trend is correctly predicted.
24-hour global trading: The forex market trades 24/7, allowing investors to find opportunities in markets across different time zones.
High leverage: Forex trading offers high leverage ratios, allowing investors to participate in larger-scale trades with less capital.
Market transparency: The forex market is a fair and transparent market without market makers, where even central banks cannot manipulate prices.
Low entry barriers: Compared to stocks, futures, and options trading, forex trading has lower entry barriers, with some forex platforms offering mini and micro accounts with small minimum investment amounts. For example, the 4E forex platform allows trading with just $2-3.
How can the Average Person Start Trading Forex?
For the average person looking to start forex trading, here are some basic steps and advice:
Step one: Master the basics of forex trading: Before starting to trade, learn the basics of the forex market, including currency pairs, trading times, market participants, etc.
Step two: Understand the impact of fundamental news on forex trends: The forex market is influenced by global economic events and political news, understanding these factors’ impact on the market is crucial.
Step three: Learn technical analysis: Study and understand the use of various technical indicators, which will help you better analyze market trends and price dynamics.
Step four: Choose an excellent, regulated forex trading platform: Ensure to select a regulated forex platform to safeguard your funds.
Step five: Start with small deposits to experience the market: Begin trading with small amounts of capital to gain experience and feel the market’s fluctuations.
Step six: Gradually increase trading activity: With accumulated experience, gradually increase the trading volume and develop your trading strategy.
In conclusion, investing in forex is a field with enormous potential that can provide lucrative returns but also comes with certain risks. Understanding the market, continuous learning, and cautious trading are key to success. More and more people are getting into forex trading due to the market’s attractiveness and opportunities, but everyone in the forex market needs to make prudent and wise decisions.
As a trading platform, 4E Forex supports leveraged trading of up to 1000 times long/short, with a single lot size of 0.01-20 lots, starting trading with as low as $3, the lowest spreads on the web, and actively promoting compliance worldwide. Currently holding financial licenses in multiple countries, it has become the global partner of the Argentine national team, ensuring platform security and stable operation, and fully protecting customer rights.
Currently, 4E is hosting the “Crazy Thursday” event, aimed at providing investors with a lower fee rate and higher returns environment. During the event, trading derivatives such as forex, commodities, or indices, as long as your trading volume on Thursday increases by at least 50% compared to the average volume of the previous three days, you can receive a high spread rebate. No complex calculations or additional operations are required, as long as your trading volume meets the requirements, the reward will be automatically credited to your account on Friday.
