Forex facts that you must know
Many are aware that the Forex currency market is now gaining increasing popularity. But to earn a living in a currency market, one needs to know the principles of trade and the laws of that market.
Forex is one of the world’s largest markets. Successful trade requires calm, hard work, patience and analytical skills. To predict the market situation, a professional trader on Forex analyzes the growth of shares and their fall, and tracks the movement of certain pairs of currencies. To this end, it applies two types of analysis — technical and fundamental.
A fundamental one helps a trader to consider the political and economic environment, the degree of inflation, the unemployment rate and many other factors. Forex Market’s beginnings date back to the 1970s, a time when the gold standard no longer met the requirements of today’s world economy. State leaders at the time had to replace fixed exchange rate agreements backed by a gold standard with floating rates.
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Technical analysis is carried out on the history of a certain financial asset — its growth and decline. It is useful to know some interesting Forex facts about this market:
- Almost 100% of participants in this market lose the first deposit. Psychologists think that a trader playing demo scores is colder than a real one.
- Forex is the largest stock market in the world.
- Every month, 9–20 trades are opened by 41% of traders on average.
- Large deposit size is not a guarantee of successful trading on Forex. The ability to trade is the only real guarantee of success with a positive outcome.
- Forex market concept dates back to the official abolition of the gold standard.
- According to statistics, only about 5% of traders continue to trade on the Forex after losing their first deposit.
- Exchange rate fluctuations became directly dependent on demand and supply, so the conversion of currencies became free, the rates — floating.
- The most popular currency in the forex market is the US dollar which powers more than 88% of trades worldwide.
- The world’s major trading centers on Forex are Tokyo, New York, Sydney, Frankfurt and London.
As at present, trade in the currency market was marginal, effected through loan funds. A little later the margin requirements were simplified, which led to the entry of new participants: private traders, dealing centers and brokerage companies. Brokerage companies are still intermediaries for individual traders, providing them with access to trade.