**Forex Trading for Beginners: A Complete Guide**
*Based on content from the video by Sasha Evdakov of Tradersfly*
Foreign exchange, or Forex trading, is the process of exchanging one currency for another with the aim of making a profit. With over $6 trillion traded daily, the Forex market is the largest and most liquid financial market in the world. It operates 24 hours a day, five days a week, and is used by individuals, institutions, central banks, and corporations for both hedging and speculative purposes.
This guide provides a detailed breakdown of how Forex trading works, the key concepts every trader needs to know, and practical steps to get started as a beginner. Based on the education provided by Sasha Evdakov (Tradersfly), as well as supplementary insights from reputable Forex educational sources, this article will walk you through the essentials of navigating the global currency market.
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## What is the Forex Market?
The Forex (foreign exchange) market is a decentralized marketplace where currencies are bought and sold. It plays a vital role in global trade and investment by determining exchange rates for currencies.
Unlike stock markets, which are centralized and regulated through exchanges, the Forex market functions over-the-counter (OTC), meaning trading is conducted directly between parties via electronic platforms or over the phone.
### Key Features of the Forex Market:
– **Decentralized trading**: Unlike stock markets, there’s no central hub for forex trading.
– **High liquidity**: Currency pairs can be bought and sold quickly with minimal price deviation.
– **24-hour market**: Trading occurs continuously from Sunday at 5 PM EST to Friday at 5 PM EST.
– **Leverage availability**: Brokers offer leverage, allowing traders to control larger positions with a small amount of capital.
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## How Forex Trading Works
In Forex trading, currencies are quoted in pairs, such as EUR/USD or USD/JPY. When you place a trade, you’re simultaneously buying one currency and selling another.
Example: If you believe the euro will strengthen against the U.S. dollar, you would go long (buy) the EUR/USD pair. If you’re correct, and the euro rises in value, you can sell it back at a higher price and profit from the difference.
### Currency Pair Structure:
– **Base Currency**: The first currency in the pair (e.g., EUR in EUR/USD).
– **Quote Currency**: The second currency (e.g., USD in EUR/USD).
– **Bid/Ask Price**:
– **Bid**: The price at which the broker is willing to buy the base currency.
– **Ask**: The price at which the broker is willing to sell the base currency.
– The difference between bid and ask is the **spread**, which is the broker’s fee.
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## Major Currency Pairs
There are hundreds of currency pairs, but most trading is centered around a few top combinations known as major pairs.
### The Major Forex Pairs:
– EUR/USD (Euro / US Dollar)
– USD/JPY (US Dollar / Japanese Yen)
– GBP/USD (British Pound / US Dollar)
– USD/CHF (US Dollar / Swiss Franc)
– AUD/USD (Australian Dollar / US Dollar)
– USD/CAD (US Dollar / Canadian Dollar)
– NZD/USD (New Zealand Dollar / US Dollar)
Majors are highly liquid due to the high volume of trade between countries issuing these currencies.
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## Types of Forex Trading
Sasha Evdakov categorizes traders by style and strategy. Understanding these helps beginners determine what approach fits their goals and personality.
### Trading Styles:
1. **Scalping**:
– Involves quick trades held for seconds or minutes.
– Targets very small price changes.
– Requires a high level of attention, speed, and discipline.
2. **Day Trading**:
– Positions opened and closed within the same day.
– No overnight risk.
– Requires technical
Read more on USD/CAD trading.