What is Forex? How Do You Trade on Foreign Exchange Markets?
What is Forex?
What is Forex which the investment tool that we see on social media, advertisements and news pages almost everyday?
The logic of Forex, which takes its name from the abbreviation of the words (Forex Exchange), is currency conversion. The reasons why it attracts attention from all over the world is that it does not have a single location and is an electronic market spread with companies, brokerage firms and central banks. The most important factor is the absence of manipulation. It is not possible to manipulate this market, which has the widest product range, has a transaction volume of trillions of dollars, has no center, and has thousands of banks and institutions. If we talk about its other advantages, it is easily accessible, open 24 hours a day, 5 days a week, and there is a lot of competition. The lack of any centralization keeps the competition between institutions strong, and thus brokers are in constant competition to offer the best price and service to investors. This situation offers investors more advantageous conditions and options. Another issue is how markets are affected. For example, even if you have a large portfolio in the stock market, you can progress without the need to follow the market closely, but this situation is much different in Forex. If you want to make a profit, you need to follow this market, which is mostly affected by the global market, much more closely. Governmental agendas, political events and geopolitical developments are also very influential. It contains gold, silver, oil commodities and indices of countries with strong economies such as Nasdaq, Spx, Dax, Fra, SMI.
There is only one question on everyone’s mind; Does Forex really bring profit?
When we look at it objectively, it is possible to answer yes, but there is a high probability of experiencing loss. Compared to stock market, crypto or stock investments, the Forex market has a transaction volume of approximately 5 trillion dollars. In general, it may seem like a complicated and intimidating platform for beginners, but it is possible to make money with the right strategy and technical knowledge. To do this, you must manage your portfolio as if you were managing a company. You must do fundamental analysis and understand the market. It is important to decipher market developments, charts, technical information and basic terms. After you get through the basics, your next step will be the institution you will be transacting with. For this, you need to find the right brokerage firm. It must be legal and reliable, have the necessary licenses and be better than other institutions in the market with the advantages it offers. Once you have made your institution selection, you are now ready to take action. Actually, it would be beneficial for you to be patient here. If you follow the markets and then improve yourself with a demo account, your progress will be healthier when you switch to real transactions. Setting a goal for yourself and acting cautiously towards this goal will be useful in minimizing your losses. Starting with small amounts is also one of the tricks of this market. If you do not have experience, it is better to keep your trading volume and bankroll small, but if you have experience, when your bankroll is large, you will have more transaction volume and your earnings will increase accordingly. Another of your strategies will be risk management. By determining the right strategies for correct profit and loss management, you can minimize your losses and maximize your earnings. The more risk appetite you have in this management, the more profit you will receive in return. TP (take profit) and SL (stop loss) points will be useful in controlling your transactions. However, the collateral you attach to transactions significantly affects your transaction volume. The collateral you use and the collateral released must be close to each other. In this way, when you encounter a negative situation and experience a loss, you can save your portfolio with the least damage.
In summary, the Forex market can bring big losses as well as big gains. For this, you need to act logically, not emotionally, improve yourself and operate with as much knowledge as possible. When you manage your portfolio by finding the right brokerage firm and investing according to your risk appetite, you will see the benefits of experience. You have reviewed; What is Forex.
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