Best Course to Learn Forex: Frequently Asked Questions of Forex Trading

1.  What does forex mean?

Forex is the process of exchanging one currency pair with another.

2.  What is the purpose of trading forex?

Companies and dealers do forex trading for two purposes i.e.

• Speculation
• Hedging

The traders use speculation to earn money through the changes in the currency prices. However, hedging refers to the fixed prices for production and sales in foreign markets.

3.  Is forex trading volatile?

Forex markets are one of the well-known liquid markets worldwide. Unlike the real estate markets, forex markets show lower volatility. The volatile nature of a certain currency depends upon different factors like the politics and finances of the particular country. So, volatility occurs due to the economic uncertainty in the payment default or disparity in trading relationships among different currency pairs.

4.  Is forex trading regulated?

The forex trading regulation relies on jurisdiction—countries such as the USA’s advanced infrastructure and markets to carry out forex trades. Therefore, different regulatory authorities like Commodity Futures Trading Commission (CFTC) and National Futures Associations (NFA) strictly regulate forex trading. But, because of the increased use of leverage in forex trading, developing countries such as China and India have limitations on the companies and money to be utilized for forex trading. Europe is the center for forex trading. In the UK, The Financial Conduct Authority (FCA) monitors and regulates forex trading.

5.  Which currencies are most suitable for trading?

Currencies with greater liquidity exhibit-ready market and so shows easy and most probable price action due to external events. The USD is a highly traded currency worldwide. Out of the seven currency pairs, it exhibits six characteristics with high liquidity in the markets. If the currencies show lower liquidity, you can’t trade them in large lot sizes because it requires proper market movement and price. Such currencies are normally related to developing countries. They make an exotic pair with the currency of the developed country. For instance, the combination of USD (US Dollars) and INR (Indian Rupee) make a great pair.

6.  How can I start forex trading?

• Firstly, educate yourself about the details of forex trading, like its terminologies and market operations.
• Secondly, prepare a trading strategy depending on the economics and risk tolerance.
• Lastly, you should start a brokerage account.

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Best Course to Learn Forex