🌍 Complete Forex Knowledge
The Ultimate Guide to the Foreign Exchange Market
🔹 What is Forex?
Forex (FX) is the Foreign Exchange Market where currencies are traded. It is the world’s largest financial market with daily turnover over $6 Trillion.
- Works 24 hours/day, 5 days a week.
- Open to banks, corporates, hedge funds, and retail traders.
- Bigger than stock and commodity markets combined.
🔹 Currency Pairs
Currencies are traded in pairs (e.g., EUR/USD). The first currency is the Base and the second is the Quote.
- Majors: EUR/USD, GBP/USD, USD/JPY, USD/CHF.
- Minors: EUR/GBP, GBP/JPY, EUR/JPY.
- Exotics: USD/INR, EUR/TRY, USD/THB.
🔹 Key Forex Terms
- Pip: Smallest price movement (0.0001).
- Lot: Standard trading size (1 lot = 100,000 units).
- Leverage: Borrowed funds from broker (e.g., 1:100).
- Spread: Difference between Buy and Sell price.
- Margin: Minimum deposit to open a position.
🔹 Market Sessions
Forex runs 24 hrs through global sessions:
- Sydney
- Tokyo
- London
- New York
Best time to trade: London + New York overlap (high liquidity).
🔹 Participants
- Central Banks: Influence rates & policies.
- Commercial Banks: Provide liquidity.
- Corporates: Trade for international business.
- Retail Traders: Trade via brokers.
- Hedge Funds: Large speculators in forex.
🔹 Trading Styles
- Scalping: Quick trades within minutes.
- Day Trading: Positions closed the same day.
- Swing Trading: Held for days/weeks.
- Position Trading: Long-term trades.
🔹 Analysis Methods
- Fundamental: News, interest rates, economy.
- Technical: Charts, indicators (RSI, MACD, Moving Averages).
- Sentiment: Market mood (bullish/bearish).
🔹 Pros & Cons
| Pros | Cons |
|---|---|
| High liquidity | Very risky due to leverage |
| Low costs (spreads) | Hard to predict global events |
| 24x5 open | Broker scams possible |
| Profit in rising & falling markets | High volatility |
🔹 Forex in India
Retail forex trading in international currency pairs is not legal in India except INR-based pairs on NSE/BSE:
- USD/INR
- EUR/INR
- GBP/INR
- JPY/INR
Using offshore brokers is not permitted by Indian regulations.
❓ Forex FAQs
Forex has higher liquidity and is open 24x5, but is riskier due to leverage. Stocks are safer for beginners.
Yes, but only INR-based currency pairs (USD/INR, EUR/INR, GBP/INR, JPY/INR) on Indian exchanges.
You can start with as little as $50–$100 with brokers, but higher capital gives better risk management.
The overlap between London & New York sessions is the most active and liquid time.
It can be safe if you use a regulated broker, manage risks, and avoid over-leverage. Otherwise, it’s very risky.