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The forex (also known as FX or foreign exchange) market refers to the global marketplace where banks, institutions, and individuals speculate on the exchange rate between fiat currencies. The forex market is the largest financial market in the world. How does forex trading work? As a forex trader, you are speculating on whether one currency will rise or fall in price against another currency. So “forex trading” can be defined as the process of speculating on currency prices to try and make a profit. The value of a currency is influenced by economic, political, geopolitical events, and trade and financial flows. Placing a trade in the foreign exchange market is simple. The mechanics of a trade are very similar to those found in other financial markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

Now that you know what forex is, why you should trade it, and who makes up the forex market, it’s about time you learned when you can trade. It’s time to learn about the different forex trading sessions. Yes, it is true that the forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day.

For the sake of comparison, let us first examine a market that most folks are probably very familiar with: the stock market. By its very nature, the stock market tends to be very monopolistic. There is only one entity, one specialist that controls prices. All trades must go through this specialist. Because of this, prices can easily be altered to benefit the specialist and not traders. How does this happen? In the stock market, the specialist is forced to fulfill the order of its clients. Now, let’s say the number of sellers suddenly exceeds the number of buyers.

There are many benefits and advantages of trading forex. Here are just a few reasons why so many people are choosing this market: No commissions No clearing fees, no exchange fees, no government fees, no brokerage fees. Most retail forex brokers are compensated for their services through something called the “spread“. No fixed lot size In the futures markets, lot or contract sizes are determined by the exchanges. For example, a standard-sized contract for silver futures is 5,000 ounces. In forex, you can trade smaller lot sizes, or position size. This allows traders to open trades as small as 1,000 units. Low transaction costs The retail transaction cost (the bid/ask spread) is typically less than 0.1% under normal market conditions. For larger transactions, the spread could be as low as 0.07%. Of course, this depends on your leverage, and all that will be explained later. A 24-hour market There is no waiting for the opening bell. From the Monday morning opening in Australia to the Friday afternoon close in New York, the forex market never sleeps. This is awesome for those who want to trade on a part-time basis because you can choose when you want to trade: morning, noon, night, during breakfast, or in your sleep. No one can corner the market The FX market is sufficiently liquid that significant manipulation by any single entity is all but impossible during active trading hours for the major currencies. The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank or the mighty Chuck Norris himself) can control the market price for an extended period of time. Leverage In forex trading, a small deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum.

Choosing a forex broker will be the first crucial decision you’ll make as a new trader. This is why you should always perform due diligence (“do yo DD”) and DYOR. Dealing desk forex broker? Non-dealing desk forex broker? Market maker forex broker? If you’ve started doing any of your own research on which forex broker to use, you’ve probably come across a bunch of terms and an alphabet soup of acronyms such as DD, NDD, MM, STP, ECN, DMA, OTC, LP, etc. And after coming across all these acronyms, you probably reacted with your own acronyms like…OMG. WTF? If you haven’t seen any of these acronyms yet, don’t worry, you will. They’re all over the interwebz so you’re bound to see them. It’s inevitable. There’s a lot of technical jargon that’s used when describing forex brokers. Some of what you read or hear about are probably outdated, inaccurate, or even misleading. For example, you may have read that retail forex brokers come in two types: Shady Non-Shady