What is Forex Trading?

What is Forex Trading?

Foreign currency exchange is called Forex trading. If we analyze it a little more, it must be said that the exchange of one country's currency with another country's currency is called Forex trading.

Recently, Forex trading has gained immense popularity. The tendency to get involved in the Forex market is more noticeable among young people around the world.

Although there was no such thing as retail Forex traders before 1990.
Until 2016, there was an idea that the daily trading turnover in the retail Forex market was 282 billion US dollars, which is only 5.5% of the entire currency market.

Before the 1990s, trading was centered on large institutions. Due to the availability of computers and the internet, Forex brokers ensured the participation of ordinary traders.

It is worth noting that we are only retail traders. Because of brokers, we have the opportunity to invest in the market in a simple way. However, there is a huge difference between institutional traders or trading and retail trading.

If you are a person over 18 years of age and have certain documents, you can trade in the Forex market.

Since retail Forex brokers provide services, each country has a regulatory agency for those broker. The regulatory agency ensures the safety of the investor or trader's assets.

For example, in the United States, the Commodity Futures Trading Commission (CFTC) has set the leverage for major currency pairs at 50:1, and the maximum for other pairs is 20:1.

The initial version of the CFTC's 2010 regulations proposed reducing the leverage limit to 10:1. But due to criticism from Forex traders, the CFTC set the maximum limit for higher leverage of 50:1 and 20:1. Before 2010, when these rules came into effect, there were no such restrictions.

Also, almost every country has set the maximum leverage level through its own policy to ensure the safety of its citizens.

Forex trading is not only done through a trading platform. Forex trading includes all types of currency exchange, including buying/selling goods from one country to another, and tourism.

Some people are exchanging currencies to buy or sell their own goods, while others are speculating on currency price fluctuations and making profits/losses.