Investing in Forex: what you need to know before embarking on the adventure

Be like a dear trader because this is a topic that interests you.

We are talking about the most popular and accessible financial markets for investors around the world.

With a daily trading volume exceeding $5 trillion, the Forex market is the unrivaled star of the global economy. It offers great liquidity and investment opportunities for those looking to diversify their portfolio and make short and long-term profits.

Today we have some tips and tricks for you to get the most out of your trading if you are willing to start investing in this market.

What is Forex and why invest in it?

Also known as the foreign exchange market, it is a decentralized market in which the world's main currencies are traded. The operation of the Forex market is based on the purchase and sale of currency pairs, in which there is speculation about the evolution of the exchange rate between two currencies.

There are always buyers and sellers willing to operate in the market. Furthermore, the Forex market is accessible to anyone with an internet connection and a trading account.

Let's go with the basic terms or

Some of the most important terms include:

Currency pairs: They measure the value of one currency with respect to another. A currency pair can be divided into the “reference currency”, which is the currency listed first; and in the “secondary currency”, also known as “listed currency”.

El spread: the difference between the buying and selling price of a currency pair.

The leverage: which allows the investor to operate with a greater amount of money than what is available in their account.

What are the main currency pairs in Forex?

The most popular currency pairs in Forex include EUR/USD, USD/JPY, GBP/USD and USD/CHF.

EUR/USD: Represents the euro (EUR) against the US dollar (USD).
USD/JPY: Represents the US dollar (USD) against the Japanese yen (JPY).
GBP/USD: Represents the British pound sterling (GBP) against the US dollar (USD).
USD/CHF: Represents the US dollar (USD) against the Swiss franc (CHF). Tell how many Swiss francs you need to buy one US dollar.

In essence, these pairs reflect exchange rates. For example, a EUR/USD of 1.20 means you need 1.20 US dollars to buy one euro. If EUR/USD rises to 1.25, it means that each euro becomes more expensive, needing $1.25 to buy it.

The capital requirements to invest in Forex vary depending on the broker and the strategy you decide to use. To give you an idea, some platforms recommend a range of $100 minimum, up to $500 in the first trades. But, it's all relative in the end. In our community we talk about topics like this frequently. and we can help you decide according to your case.

There are various strategies used by Forex investors, such as scalping, swing trading or intraday trading. You can go through our other posts and you will get a lot of information about it.

Tell us if you would like a second part going deeper into the entire history of this market, investment strategies and stories of our success stories.

Until next time, trader!