Forex trading may be a bit of a complicated word for some, but it’s really not complicated at all.
In this article, we will explain what is forex trading in a simple way.
The word forex comes from “foreign exchange”, and is simply the purchase and sale of currencies.
It is a market that moves more than 6 trillion dollars per day.
So, what is forex trading?
When we talk about forex trading reference to speculation of raising or lowering one currency over the other.
That is, you don’t really buy the currency but only speculate about the future value of one over the other.
Let’s see, for example, the EUR / USD trading.
In this case, we will make a speculation about the variation of the euro over the dollar. I decide to bet that the euro will rise against the dollar, so I buy this option.
If the euro goes up against the dollar, I win, and if it goes down, I lose.
This is what we mean when we talk about forex trading.
Another term related to forex is leverage. It can generate a bit of confusion when you just hear the word, but it’s not complicated to understand.
Leverage is a tool to invest in much larger markets than we can spend.
A synonym for leverage is a multiplier. Because what leverage does is multiply your investment. For example, invest in a $ 1000 market with only $ 10 (multiplier x100).
As you can imagine, it has many benefits to use leverage. But how you can earn a lot of money can also lose a lot of money. And that is why it is not a tool that is recommended for beginners.
Platforms that trade with forex
eToro: This is one of the leading companies in which you can trade with forex trading. You can also trade with stocks, options, and much more. It has a wide reputation and is a secure platform to negotiate.
OlympTrade: Olymp Trade is a way to trade with forex and binary options. With OlympTrade, you can open a demo account in which you receive $ 10,000 and thus practice with virtual money before investing seriously.