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You will agree with me when I say that Forex trade can look a bit difficult for beginners.

There is no doubt about that.

But how will you feel when you know the important details of Forex? The important details that will be the foundation to build your Forex business on. The details that will increase the chance of your success.

You will feel awesome.

On this post:

You will learn what is Forex trading, who and why do people trade Forex, and on the last note you will understand the advantages of trading Forex.

So what are you waiting for:

Let’s dive right in.

1. What Is Forex Trading

Examine this:

Forex is a word coined from Foreign Exchange. The FOR is from the first three letters in FOReign and EX from the first two letters in EXchange.  

So literarily, Forex means Foreign Exchange.

You might wonder:

What now is Foreign Exchange?

Foreign Exchange, Forex is the trading of one currency to another. And if you think of it, almost everybody on earth has been involved in Forex at one point or another in their lives.

Take for example:

You are from the United States and you want to go for a holiday in the United Kingdom.

The currency you spend in the US is different from what they spend in the UK.

So:

You have to exchange your currency with your destination’s foreign currency. In this case you will exchange your USD (US Dollar) for GBP (Great Britain Pounds).

In that simple example, you sold your USD for the British GBP and that is what forex trading is all about.  That is one form of Forex trading.

Now that you have a good foundation on what Forex is…

… Let’s quickly move to why and who are the people that trades Forex.

2. Why and Who Are Forex Traders

Admittedly:

This is one of the questions that usually comes to my mind when I was starting out as a Forex trader.

I can assure you that understanding the answers to this question make or break the foundational knowledge of your Forex trading.

By the way:

In other to make Forex trading simple and easy for this blog’s readers…

… we have created a free telegram channel that gives Forex trading signals from our expert analysts.

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To those that does not know; Forex trading signal tells you which currency pair to trade, when to trade and when to stop.

This is a Golden chance for you.

Join the channel then come back to our discussion.

Who trades Forex and why do they trade it?

In most cases:

Forex is usually traded by Central banks, Banks, Corporations and Retail traders.

Why do these people trade Forex?

Central Banks.

The central banks get involved in Forex trading as a means to regulate their currency in the market.

For example:

When the central bank of a country notices that its currency is appreciating too much in the market…

… the central bank will intervene with a move to save its currency.

Banks

Banks get involve in Forex so that they can provide liquidity to corporations. Banks also trade Forex whenever they notice a risk on their currency.

Corporations

When a corporation wants to get a product or raw materials from a different country, …

… the corporation will have to exchange its currency for the other country’s currency.

So corporation sell their country currency to get another country’s currency to buy a product or service.

Retail Trader

This is the traders like you and I that speculate in the Forex market with the sole aim of earning profit.

I am pretty sure that you are here because of this.

Many people have been earning form Forex trading for a long time, why don’t you join them now?

Now we will get into the advantages of Forex trading.

3. Advantages of Forex Trading

There have been some high vibes about this Forex trading of a thing.

So what the advantages?

Here they are:

High Liquidity

What does that mean?

It means that the order you place won’t just go high or up drastically in a short period of time.

Someone has to put in a very big lot size to move the market.

Low Entry Barrier

Anybody can trade Forex from anywhere in the world (although some countries do not allow Forex).

If Forex is not blocked on your country you can trade by just opening an online account, fund it with little money then start earning.

Better Risk Management

In forex, you are allowed to trade little lot sizes using micro or Nano lots. With these small sizes you will be able to manage your risk and improve the chances of you coming up with profits every single day you trade.

Trade Anytime

You can trade Forex anytime you want between Mondays to Fridays, 24/5.

Low Transaction Cost

Forex trading has the lowest transaction cost among its peers. The amount it will cost you to place a trade is very minimal and in many cases insignificant.

In conclusion:

You learned what Forex trading is, its advantages and, who and why people trade it.

What you should do now to take you Forex trading knowledge to the next level is to Join the expert analysts free telegram channel and start earning more right from day one.