What is forex trading and how does it work?

Learn the meaning of Forex trading and the difference between it and stocks - Forex trading or foreign currency trading, which in recent years has been busy talking about, is considered to be more risky to suffer losses and it is also more difficult to run a business than investing in stocks. For more details, in this article we will tell you some of the differences between stocks and forex trading and the advantages of each.

Forex trading is currently a trending business in society because they can now run it online through applications on smartphones and computers. And with this application you can also learn forex trading tips by professionals who have been successful forex traders for a long time, they will share their knowledge about how to trade forex in order to profit and make a lot of money. While the profit is obtained from the difference in the selling price minus the purchase price of the foreign currency.

How do forex traders make money?

A simple understanding of how forex trading works is that you buy foreign currency in the forex market and then store it for a certain time and then when the forex market is up, you sell it and that's where you will make a profit. So the working principle is the same as buying and selling cellphones and so on, the difference is that the goods being traded are in the form of foreign currency. And in the forex market you can transact not only with traders in your country but also with foreign forex traders, all of which is done online with forex trading applications or software.

Can you get rich by trading forex?

Why can the value of a country's currency be higher or lower than the currency of another country? One of the reasons is economic stability. If a country's economy is developing in the country and exports and imports are developing, it can be a factor in the value of the currency being higher than before, also higher than the money of other countries that are experiencing financial problems or monetary crises.

Therefore, for those of you who want to succeed in getting a lot of money from forex trading, you must be able to analyze economic conditions in other countries as a basis for you to make decisions to buy or sell currencies. If you can buy when the currency value is low and then sell when it is high then you will get a lot of money and you can even get rich from forex trading.

Is forex trading good for beginners?

For those of you who just want to learn the forex trading business, you can first look for information from YouTube or Google about how the forex market works, how to analyze the market and other things about trading so that you have the knowledge so that later you don't make mistakes when you start real trading. You can also join forex trading groups on social media to learn more about the problems commonly faced by traders and get advice from professional traders.

As additional information to distinguish forex from stocks so that you can compare what is more profitable and the risk of loss is small, here is the following:

1. Stocks do not have a 'leverage' option while forex can use leverage or borrowed funds at a certain ratio.

2. Stock trading hours are only from morning to evening while the forex market lasts 24 hours

3. Fundamental analysis is preferred on stocks while on forex it's up to you

4. For investment purposes, stocks can be used as future investments, while forex cannot because of rapidly changing currency values.

Thus the information about forex that you need to know may be useful for those of you who are interested in the forex business.