Course Content
What Is Forex Trading?
Forex is the world's largest market by trading volume and liquidity. Brokers, businesses, governments, and other economic agents trade currencies and forex derivatives to enable international commerce. Traders also use the market for speculative reasons. There are various arbitrage opportunities to be found with exchange rates and interest rates, making the market a popular one to trade in large volume or on leverage. The forex market consists of fiat currency pairs and their relative market prices. These pairs are typically bought and sold by the lot. A standard lot contains 100,000 units of the pair's base currency, but other smaller sizes are available, ranging down to 100 units. Traders commonly use leverage to increase the amounts they can invest with their capital. You can also offset risk by using forwards and swaps to trade a currency pair for a specific price in the future. Combining these two instruments with other trading strategies and products creates a variety of investment opportunities for forex traders.
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Introduction
What is Forex?
What is a forex pair?
Why do people trade forex?
Where do people trade forex?
What makes forex trading unique?
How do people trade forex?
What is a pip?
What is a lot in forex trading?
How does leverage work in forex trading?
How does hedging work in forex?
Futures contracts
Options
Covered interest rate arbitrage
Step 1: Finding an arbitrage opportunity
Step 2: Hedging your FX rate
Step 3: Completing the arbitrage
Step 4: Comparing profits
Closing thoughts
What Is Forex Trading?
About Lesson

Forex has many aspects that make it different from other financial markets:

  1. It has huge geographical coverage. There are 180 recognized foreign currencies around the world, creating markets for them in almost every country.
  2. It’s extremely liquid and has massive trading volume.
  3. Its market prices are affected by numerous global factors. These include politics, economic conditions, speculation, remittances, and more.
  4. It’s open for trading approximately 24 hours a day, five days a week. Because the market isn’t wholly centralized, an exchange or brokerage is almost always open for you to use. Markets are closed on the weekend, but there is still after-hours trading available on some platforms.
  5. Its profit margins can be low unless trading in high volume. Slight differences in the exchange rate can be made profitable through large trades.
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