15 facts about Forex Trading

The market is genuinely gigantic when we compare it with others.

Imagine a situation where there are two boxers.

One is in red and one in blue.

On one side, there’s a giant.

And on the other side, there’s a baby.

It is the best analogy for comparing forex with other markets.

Every day, the FX market sees about $6 trillion in transactions.

Money just floods in from Monday through Friday.

It is a massive sum of money.

That is why forex is known as the world’s largest market.

To give you an idea, trillions have 12 zeros in them.

If we compare, the stock market would see $25 billion in daily transactions.

As a result, the market offers several options.

You and I can also get our hands on this massive market.

And we can make some cool pips in the process.

Forex, according to some, dates back to biblical times.

The Egyptian money market traced back to the fourth century.

As we evolved, so did our way of doing trade.

FX began in the Netherlands 500 years ago, astonishing if we’re talking about recent history.

It happened because merchants wanted free trade.

By 1875, we had a standard Gold system in place.

With the Bretton Woods system in 1944, the gold standard ended.

We had free-floating exchange rates in 1972.

On the broker’s platform, you’ll see pairs.

On the left side, we have a base, while on the right, we have a quote.

You buy the quote with base currency.

So that’s how forex trades in pairs.

I’ll explain this in simple words.

When you go abroad, you use the country’s currency.

You buy one currency in exchange for another.

So, there is an exchange involved.

FX pairs have backing from the state.

They don’t just pop out one day and decide to list themselves.

Every country does trading.

So, they buy something and also offer something.

When countries do trading, they exchange currencies.

Now what’s important to mention are the types of FX pairs.

They are majors, minors, and exotics.

The critical element is majors are USD.

It’s in all of them.

Minors comprise developed nations’ currencies.

They include EUR/JPY, RUR/CAD, EUR/GBP, and many more.

The minor volume FX pairs are exotics.

They are super volatile.

And can raise to 100 to 200 pips in a day.

Examples include; USD/SEK, GBP/ZAR.

So, you have a plethora of choices for the FX market.

I mentioned the types of pairs above.

Whatever occurs in the US, the FX majors can go wild.

One good example of this is the US president tweeting.

The POTUS tweets some random thing about USD.

The USD would strengthen, and others would become feeble.

So the USD would grow in comparison to other currencies.

And this is only one example.

Interest rates, inflation, and the economy in general.

They all have an impact on the value of the US dollar.

First, London has long been a worldwide trade powerhouse since Britain Empire.

It involves more significant currency exchange transactions.

So, FX plays a gigantic role in the UK.

The highest volume comes from seven forex pairs.

These seven pairs are EUR/USD, GBP/USD, USD/JPY, AUD/USD, NZD/USD, USD/CHF, and USD/CAD.The highest volume comes from seven forex pairs.

As you can see, they are all major economies.

So, their trading activity is massive.

The forex market comprises fiat currencies.

The states are backing these currencies.

Whenever something happens, central banks intervene.

They took drastic measures to stabilize currency rates.

When this happens, the forex market doesn’t go all yahoos.

So, that’s how forex tends to stay calm.

It is an excellent advantage for you.

You can hold or take positions easily.

However, one can’t get away from losses.

First, currencies are the symbol of a country’s culture and identity.

These things do not vanish.

GBP, for example, isn’t going away anytime soon.

It depicts how the United Kingdom interacts with its international economic partners.

So, we have a forex market as far as we have currencies.

Three cheers to forex!!!

To begin forex trading in the 1970s, you would have needed millions of dollars.

The major participants were financial institutions back then.

Only a handful of retail traders were trading.

With the internet boom, the market became accessible.

Now, you don’t need significant capital.

You only need internet, a PC or a phone and voila!

The reason is financial institutions.

These financial institutions are the big fish.

These fish have big sums to spend on.

And they are the ones who control the forex market.

So, the next time you see a trade going you, chances are it’s because of big fish.

Well, the German investment bank is one of the largest banks in the world.

It has been around since 1870.

It has a 21% share in the foreign exchange market.

That’s massive!

Forex depends on several factors.

Economic data, geological situations, even natural disasters can impact currencies.

Many traders think it is an easy market.

So, they enter without analyzing these factors.

And that’s when they lose.

According to stats, 95% of people fail.

44% of forex traders are between the ages of 25 and 34.

With the market easily accessible, many young people are joining in.

Plus, many young people are looking to diversify their investments.

So, forex provides them with plenty of opportunities.

Women outperform males in forex trading.

Women are better traders than men by 1.8%.

However, women trade way less than males.

Well, it’s no surprise!

China’s economy has been on the rise since the 1980s.

They started accumulating forex reserves for the betterment of the economy.

So, they increased their USD reserves.

According to an estimate, China has $3399 billion forex reserves.

Bottom line

So, there you have it!

Now you can impress anyone with these 15 forex facts.