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Forex definition

What is FOREX?

​The Forex (also referred to as FX) stands for FOReign EXchange (currency trading) and is Over the Counter (OTC) market. The Forex market is the largest and most liquid financial market in the world participated in by a huge volume of traders who buy and sell currencies. Daily currency trading transactions amount to more than US$5 trillion, a far cry from the combined volume of transactions in equity markets at only US$30 billion.

​​Previously, participation was only limited to banks, hedge funds and major currency dealers. But with the persistence of small financial institutions and the advent of the internet, the foreign exchange market has allowed the trading of currencies at the retail level. With the internet and the development of various proprietary software, numerous interested traders around the globe can now take part in the Forex market.
What is FOREX

How Forex works

Forex trading takes place 24 hours a day, five times a week. Currencies that are commonly traded include the US Dollar, Euro, Japanese Yen, Swiss Franc, Canadian Dollar, British Pound and Australian Dollar. They are also called by trader as the majors and account for more than 85 percent of the daily Forex transactions.

It is a standard procedure that currencies are traded in pairs. For example, the Japanese Yen is paired with the US Dollar, the Euro with the English Pound. If an investor, for instance, feels that the US Dollar's value will increase against the Yen, he or she will likely sell Yen and buy US Dollars (will open a buy trade on USD/JPY currency pair).
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With the movement of currencies, profit is always possible even if there's only a small change. This is so because in every transaction, huge amounts of money are involved.

Where Forex occurs

Forex does not involve any central exchange unlike other financial markets which trade in a specific location. Instead, several trading centers around the world exist notably in London, Frankfurt, Tokyo, Singapore, New York and Hong Kong. Some 5,000 trading institutions are involved in Forex such as international banks, commercial companies, government banks and brokers for the various types of foreign currency exchange.

Complete Forex trading is done electronically either via the telephone or the internet. Online trading over the internet is now the most popular form of Forex trading today. This technology is an advantage because apart from the convenience it provides, it has also lowered transaction costs and increased speed of transactions significantly. Another benefit is its transparency attributed to the development of online trading platform.

The foreign exchange market is dynamic and will remain so. It is also stable despite the sudden falls it experiences every now and then. This is because when the value of one currency falls, what happens is the value of the other currency normally rises.
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High liquidity is another advantage of the Forex market. Compared to the New York Stock Exchange, the daily trading volume in the Forex market is estimated to be 50 times more. Additionally, there will always be traders taking part in the buying and selling of foreign currencies resulting in extreme liquidity and price stability.​

Forex Trading For Beginners

For trading, you need to understand Forex very well and the basic question that you must know the answer to is how much you are willing to risk and if you can bear the losses too.

Though there are numerous myths about how Forex traders become billionaires, there is very little truth to it. The reality is completely different. There are many times, when you will be at a loss too. With a few basic rules under your belt, you can learn how to trade Forex.

Rule 1 - Learn how to read the charts
The charts show the trend of the market. They will show you the where to enter and when to exit. Many a good trader has made profits following these charts and not by investing according to his or her intuition. There is no place of intuition in currency trading simply because this is not a speculation but rather a well-planned strategy. While you are making profits while following the trends, these trends will also help you to reduce the losses.
Forex
Rule 2 – Focus on Profits and Losses
Rather than choosing the highs and lows of the market, concentrate on learning Trading. When you follow the highs and lows and try to increase your profits by choosing these points, chances are that you will over-exceed yourself and your profit will turn into a loss.

Rule 3 – Always adapt
When you begin trading, it is usually recommended to establish your profit and loss ratio. A 2:1 ratio of Profit and Loss is commonly followed among traders. However, the key to successful forex trading is to always place your entry orders as well as Stop-Loss and Profit-Target orders in accordance to forex market volatility and the latest market structure. Always take profits that the forex market is currently offering you and do not trade with fixed RRR as with fixed RRR it will be very hard to fully adapt to current forex market structure and moves.

Another rule is to make numerous smaller trades than one big trade. Currency market is very volatile and if you try to follow the highs and lows of the market, you may end up losing your investment, as this turns a logical calculation to speculation. Formulate a strategy and follow it strictly and you will have fewer losses. Remember that for a long-term profitable forex trading, you need more profitable trades than loosing ones or higher profits than losses.
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After all these rules, the best rule to follow is to make small investments rather than a big one. A profit made from these small investments will still have a big total and will also be much safer than trying to shake the markets for any fixed RRR profits targeting.

If you want to try out forex, you have to choose a company - broker - who will provide you an access to the forex market through a trading platform. Choosing the right broker is another very important decision for a long-term profitable trading. Make sure to read our Forex Brokers Truth page and Real Brokers Reviews page when choosing a broker. If you are strating to forex, make sure to start with a risk free demo account and gain enough knowledge and experience before investing real money.

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Content of FX Trading Revolution

Forex Education - Basics:

  • What is FOREX?
  • What Is Forex Trading?
  • History of Forex
  • Forex Market Growth Factors
  • ​Forex Trading Basics that You Must Know
  • Forex Trading Hours
  • Currency Pairs
  • Exchange Rate Systems and Currency Valuations
  • Participants of Forex Market
  • Introduction to Different Investment Options for Trade the Financial Markets
  • Introduction to Trading Instruments: FOREX, Shares, Commodities, Indices, Bonds, ETFs and Others
  • Insider Information about Interbank Trading​
  • What is a Forex spread?
  • ​What is a Forex Pip?
  • Forex Leverage
  • How to Make Smart Use of Leverage in Forex Trading
  • Forex Margin and Margin Call
  • Forex Rollover and Swap
  • Different Types of Forex Orders Explained
  • How the Prices on Forex are Created and Why They Move?
  • The Best and Most Successful Forex Traders
  • ​The Habits of Successful Forex Traders
  • How to Build Your Own Forex Trading System
  • 3 Winning Steps for a Successful Trading Journey
  • Forex Trading Plan
  • Researching the Forex Market
  • Using Stop Loss & Take Profit in the Forex Market
  • Forex Demo Account vs. Real Account
  • Forex Trading Platform
  • Why is Backtesting Important for any Forex Trader?
  • How much should I start with to trade Forex?
  • Forex as a main source of income - How much do you need to deposit?

Forex Education - FX Brokers:

  • Types of Forex Brokers and True Comparison
  • ​What Forex Brokers Never Want You to Know!
  • Truth about Forex Brokers
  • Regulation in Forex Trading
  • Dirty Practices of Forex Brokers that Cost You Profits
  • How to Choose the Best Forex Broker
  • How Do Forex Market Makers Work?
  • The Hard Reality How the Vast Majority of ECN and STP Brokers Work
  • Hidden, Yet Regular Forex Trading Costs
  • Regulation on Forex, what does it mean for brokers, IBs and strategy providers?

Forex Education - Technical Analysis:

  • Technical Analysis Introduction
  • Forex Trend Definition
  • Moving Average Basics
  • Forex Trading with ​Commodity Channel Index (CCI)
  • Forex Trading with ​Relative Strength Index (RSI)
  • Forex Trading with ​MACD
  • Parabolic SAR: The Stop and Reversal Forex System
  • How Average True Range (ATR) Indicator Can Make You a Better Trader
  • Utilizing Momentum Indicator the Right Way
  • Stochastic Oscillator: Simplifying the Useful Indicator for Forex Trading
  • Getting Your Way Around the Ichimoku Kinko Hyo Indicator
  • Unveil the Amazing Story Behind Bollinger Bands
  • Trading Divergences of Forex Indicators
  • Explore the Average Directional Index (ADX) Indicator
  • The Awesome Oscillator and its Role to the Forex Trading
  • What Can Accumulation Distribution Indicator Do in Trading?
  • Why Traders need to Understand the Twist and Turns of Standard Deviation
  • Be a Forex Expert and Apply the On Balance Volume Indicator on Your Next Trade!
  • Trading Overbought and Oversold Levels with the Williams %R indicator
  • The Breakdown of MFI: Money Flow Index
  • Heiken Ashi Charts
  • How many indicators should I use on my charts? Why less is more!
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  • Price Action Trading – Most Adaptable Method​
  • Support and Resistance Trading
  • How Fibonacci Retracement is Used in Forex Trading
  • Forex Trading with Pin Bar Pattern
  • Outside Bar: An Effective Forex Trading Pattern
  • The Most Used Candlestick Patterns
  • Price Action Trading: Tips to Profit from the Forex Market
  • How To Place Stop Loss Orders Correctly
  • How To Place Profit Targets Like A Professional
  • ​Range Trading Versus Trend Following
  • ​The Psychology Behind Round Numbers and Support Resistance Levels in FX Trading​
  • Forex Breakout Trading Strategies
  • Forex Chart Patterns
  • Dow Theory and Forex Trading
  • Price Action Reading in the Forex Market
  • Pivot Points in FOREX Trading
  • Pivot Points in Forex trading - The 70-80% rule (part 1)
  • Pivot Points in Forex trading – Market sentiment and support/resistance (Part 2)
  • Volatility in the Forex Market
  • Trend trading the Forex market
  • Trend Trading vs Range Trading - Which one to choose, how to combine them?

  • Introduction to Harmonic Trading and the ABCD Pattern
  • The Gartley and Butterfly Harmonic Patterns
  • The Bat and the Crab Harmonic Patterns
  • Elliott Wave Principle Introduction
  • Counting Elliott Waves and Types of Waves
  • Practical Application of the Elliott Wave Principle

  • Analyzing and Trading Cross Currency Pairs - Introduction
  • Analyzing and Trading Cross Currency Pairs – Part 2
  • Analyzing and Trading Cross Currency Pairs – Part 3
  • Analyzing and Trading Cross Currency Pairs – Part 4
  • Analyzing and Trading Cross Currency Pairs – Part 5

Free Forex eBooks:

  • Insider Forex Strategies by FX Trading Revolution

Forex Interbank Trading:

  • Forex Interbank Market Section
  • Forex Interbank Market Explained
  • ​How to Select a Prime Brokerage and Their Role
  • Liquidity Provider Definition
  • High Frequency Trading (HFT) Explained
  • ​What is Algorithmic Trading?
  • Integral FX Inside Trading Platform
  • Currenex: The Best Foreign Exchange Aggregator for Traders
  • Liquid X Trading Platform
  • HotSpot FX ECN
  • FIX Protocol - Financial Information Exchange
  • What is Forex VPS?
  • Forex Scalping Explained
  • The Rise of Foreign Exchange Aggregators in the Trading Industry

Forex Education - Money Management:

  • The Complete Forex Money Management Guide
  • Professional Forex Risk Management
  • 8 Tips How To Manage Risks in FX Trading like a Pro
  • Money Management in FOREX: Adding to Winners and Trimming Down Losers in Trend Trading

Forex Education - Psychology:

  • The Complete Guide to Forex Trading Psychology
  • Forex Trading Psychology Basics
  • Forex Psychology: Developing a Successful Forex Mindset
  • The Forex Psychology and Traders’ Comfort Zone
  • Psychology Behind Following a Forex Trading System
  • Importance of Being a Disciplined Trader in the Forex Trading
  • Avoiding Forex Trading Systems Pitfalls
  • Forex Trading Psychology: The Borderline Between a Trading Plan and Emotional Outbursts
  • Developing the Psychology of a Successful Trader
  • Most Traders Fail! Find out the 4 Stages of Mastering Forex Trading!
  • Forex Trading Personality Types
  • The Accurate Forex Trader
  • The Administrative Forex Trader
  • The Adventurous Forex Trader
  • The Artistic Forex Trader
  • The Detailed Forex Trader
  • The Facilitative Forex Trader
  • The Fun-Loving Forex Trader
  • The Independent Forex Trader
  • The Innovative Forex Trader
  • The Planning Forex Trader
  • The Socially Responsible Forex Trader
  • The Spontaneous Forex Trader
  • The Strategic Forex Trader
  • The Supportive Forex Trader
  • The Values-Driven Forex Trader

Forex Education - Others:

  • ​Forex Blog - all educational articles
  • Forex Fundamental Analysis Basics
  • Fundamental Analysis and Trading the Forex Market Using Fundamentals
  • Nominal vs. Real Exchange Rates
  • Euro & Currency Integration
  • Interventions of Central Banks in the Forex Market
  • Seasonal Patterns and Forex Trading
  • Correlation Forex Trading
  • Correlation Between Commodities and Forex
  • How to use the correlation indicator for MetaTrader 4
  • The Most Profitable Forex Trading Strategies
  • The Four Steps to Begin Forex Trading Profitably
  • MetaTrader 4 Introduction
  • How to Install EA, Indicator or Script to the MT4 (Windows & MAC)
  • MetaTrader 5 Introduction
  • cTrader: Advanced Platform for ECN / STP FX Trading​
  • Benefits of Forex Segregated Trading Accounts
  • How to Trade Forex Like the Big Institutions
  • Carry Trading in Forex
  • Forex News Trading
  • Trading Fundamentals – Differentiating between important and noise events. How misleading stories create abnormal price moves?
  • Forex Sentiment Analysis
  • FOREX Inter-Market Analysis
  • What is Slippage in FOREX and How to Avoid Trading Losses
  • How Forex Traders Can Benefit from Price Shading
  • FOREX Depth of Market, an Useful Tool for Forex Traders
  • Forex Hedging Explained
  • Forex Trading and Taxes
  • Forex White Label Explained

Forex Investing:

  • PAMM: Exclusive Opportunity for Investors and Successful Traders
  • PAMM Managed Accounts Invasion of Forex Trading

Forex Indicators:

  • High Frequency Trading Signals Indicator
  • Support Resistance Indicator
  • Correlation indicator
  • Overbought Oversold Indicator
  • Forex Spread Indicator
  • CCI indicator
  • RSI indicator
  • Market Profile Indicator​
  • Forex Sentiment Indicator
  • The Best MACD Indicator
  • Pivot Point Extra Indicator
  • How updates of our indicators work?

Forex Tools:

  • Daily Forex Analysis
  • Live Forex Charts
  • Breaking Forex News
  • Live Euro to Dollar Exchange Rate and Chart
  • Live Pound to Dollar Exchange Rate and Chart
  • Live Dollar to Yen Exchange Rate and Chart
  • Live Aud to Usd Exchange Rate and Chart
  • Live Usd to Chf Exchange Rate and Chart
  • Real time Forex Rates and Currency Heat Map
  • FOREX Economic Calendar
  • Currency Converter
  • Forex Pip Calculator

Forex Trading Strategies:

  • 4 Hour Chart Trend Following Strategy
  • Trading the Gap Forex Trading Strategy
  • Inside Bar Forex Trading Strategy
  • Forex Breakout Confirmation Strategy
  • Trendline Reversal Forex Trading Strategy​
  • MACD Trend Forex Trading Strategy
  • Double Bollinger Band, MACD, Stochastic Crossover Forex Strategy
  • Trend Trading with the ADX and the Parabolic SAR
  • Trading the Flag and the Wedge Chart Patterns
  • Pullback Forex Trading Strategy
  • The Triangle Pattern Trading System
  • Head and Shoulder, Double Top and Double Bottom Chart Patterns Strategy
  • Rounding and Triple Tops and Bottoms
  • London Session Forex Breakout Strategy
  • Range trading the Forex market
  • Larry Williams OOPS Trading Strategy
  • Master Candle Trading Strategy
  • High Probability Tall Candle Reversal Forex Strategy
  • Increase Profits by Analyzing Multiple Timeframes to Confirm Trading Signals
  • Range Trading with the ADX and Bollinger Bands

Forex Brokers Reviews:

  • Forex Brokers Introduced
  • Real Forex Brokers Reviews
  • Purple Trading Review
  • Pepperstone Review
  • Orbex Review
  • FPMarkets Review
  • LCG Review
  • FXPro Review
  • HYCM Review
  • XM Review
  • AvaTrade Review
  • ​Axiory Review
  • LMAX Review
  • ​FXopen Review
  • Think Markets Review
  • CMC Markets Review
  • Swissquote Review
  • IC Markets Review
  • OctaFX Review
  • Dukascopy Review
  • Trader.Online Review

Cryptocurrencies:

  • What is cryptocurrency?
  • Trading cryptocurrency
  • Cryptocurrency mining
  • What is blockchain?
  • Bitcoin introduction
  • Ethereum introduction
  • Litecoin introduction
  • Ripple introduction
  • Zcash introduction
  • Dash introduction

Other trading tools:

  • Live charts of Stocks, Futures, Commodities and Stock Indices
  • Real Time Gold Price and Chart
  • Real Time Brent Crude Oil Price and Chart
  • Real Time Dow Jones Index Rate and Chart
  • Real Time S&P 500 Index Rate and Chart
  • Real Time DAX 30 Index Rate and Chart
  • Real Time FTSE 100 Index Rate and Chart
Copyright © 2015 - 2018 Trading Revolution Inc. All Rights Reserved. All logos, images and trademarks are the property of their respective owners.

High Risk Warning: Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

Any opinions, news, research, predictions, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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