Decentralized Network: Forex operates as an over-the-counter (OTC) electronic market without a single physical exchange location.
Massive Liquidity: Over $7.5 trillion is traded daily, making it the most liquid financial market in the world.
24/5 Availability: Trading runs continuously 24 hours a day, five days a week, shifting across major financial hubs: Sydney, Tokyo, London, and New York.
Paired Transactions: Currencies always trade in pairs (e.g., EUR/USD, GBP/USD).
Base vs. Quote: When buying a currency pair, you purchase the Base currency (first) while simultaneously selling the Quote currency (second).
Price Drivers: Exchange rates fluctuate based on interest rate decisions, inflation, employment reports, and global political events.
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Pip (Percentage in Point): The standardized unit measuring price movement (usually the 4th decimal place, or 0.0001).
Bid-Ask Spread: The difference between the buy price (Ask) and sell price (Bid)—this spread serves as the broker's fee.
Leverage: Borrowed capital provided by brokers that lets you control larger trading positions with smaller initial deposits.
Margin: The minimal deposit required to open and hold a leveraged trading position
Analysis Methods
Technical Analysis: Evaluating chart patterns, historical price action, and indicators (RSI, Moving Averages) to time trade entries and exits
Fundamental Analysis: Tracking economic health indicators like GDP growth, Consumer Price Index (CPI), and central bank rate policies
Breakout Trading: Entering trades when price forcefully breaks through established support or resistance levels
Range Trading: Buying near market support levels and selling near resistance levels during sideways consolidation.
Stop-Loss Orders: Automated boundaries set on every trade to cap potential losses before they become severe.
Emotional Discipline: Avoiding over-leveraging due to greed or closing trades prematurely out of fear.
How far
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