CHAPTER I : WHAT IS FOREX TRADING

Forex trading, or FX trading, involves buying and selling different currencies with the aim of making a profit. At its core, forex trading is about capturing the changing values of pairs of currencies. For example, if you think the Euro will increase in value against the U.S. Dollar, a speculator might buy Euros with Dollars. If the Euro's value rises on a relative basis (the EUR/USD rate), you can sell your Euros back for more Dollars than you initially spent, thus making a profit.
Forex trading is utilized not only for speculative motives but also for hedging. Individuals and companies utilize forex hedging to safeguard themselves against unfavorable currency fluctuations, also referred to as currency risk.
For instance, a business operating overseas may utilize forex trading as a hedge against any losses brought on by changes in the value of the currency overseas. Through the process of securing a favorable rate ahead of time through a forex transaction, they can lower the likelihood of financial instability and guarantee more consistent income or expenses in their own currency. For multinational corporations looking to maintain stability in their financial planning, this feature of forex trading is essential.

Positive elements of forex trading include strong liquidity, which makes it simple to buy and sell a wide range of currencies without seeing a big shift in value.

Traders can also employ leverage, which enables them to manage a sizable position with a comparatively little sum of money. Leverage can, however, also increase losses, which is why forex trading is a profession that calls for strategy, knowledge, and an understanding of the risks involved.

Because forex trading is a truly global industry that spans financial hubs across the globe, a multitude of global events have an impact on currency values. Currency prices can be greatly impacted by economic factors including inflation, interest rates, economic development, and geopolitical stability.
For example, if the central bank of a nation increases interest rates, the currency of that nation may appreciate because of the increased returns on investments made in that nation's currency. In a similar vein, political unpredictability or a dim forecast for economic development can cause a currency to depreciate. Because of this interconnectedness, forex trading is not only a financial activity but also a window into global political and economic tren


Buying and selling currencies with the intention of making a profit is known as forex trading. The foreign exchange market, or forex market, is an over-the-counter platform where traders can execute trades. Retail traders, banks, institutions, and investors can all use this platform.

The foreign exchange market is the biggest trading platform globally, with an average daily turnover of US$6.5 trillion. This surpasses the total size of all global stock markets. The "Interbank Market," where trading is done, enables you to execute trades five days a week, from Monday through Friday, 24 hours a day.