What is Forex?

What is Forex Trading? Forex is all about MONEY.

Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $4 TRILLION a day trade volume; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange (off-exchange). It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.

Currencies

Symbol	Country	Currency	Nickname
USD	United States	Dollar	Buck
EUR	Euro zone members	Euro	Fiber
JPY	Japan	Yen	Yen
GBP	Great Britain	Pound	Cable
CHF	Switzerland	Franc	Swissy
CAD	Canada	Dollar	Loonie
AUD	Australia	Dollar	Aussie
NZD	New Zealand	Dollar	Kiwi

Currency symbols always have three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country's currency.

Take USD for instance. US stands for United State, while D stands for dollar. Easy enough, right?

The currencies included in the chart above are called the "majors" because they are the most widely traded ones.

Forex Market Sessions

The forex market can be broken up into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Below are tables of the open and close times for each session:

Summer

Time Zone	EDT	GMT	GMT+8(Malaysia)
Sydney Open Sydney Close	6:00 PM 3:00 AM	10:00 PM 7:00 AM	6:00 AM 3:00 PM
Tokyo Open Tokyo Close	7:00 PM 4:00 AM	11:00 PM 8:00 AM	7:00 AM 4:00 PM
London Open London Close	3:00 AM 12:00 PM	7:00 AM 4:00 PM	3:00 PM 12:00 AM
New York Open New York Close	8:00 AM 5:00 PM	12:00 PM 9:00 PM	8:00 PM 5:00 AM

Winter

Time Zone	EST	GMT	GMT+8(Malaysia)
Sydney Open Sydney Close	4:00 PM 1:00 AM	9:00 PM 6:00 AM	5:00 AM 2:00 PM
Tokyo Open Tokyo Close	6:00 PM 3:00 AM	11:00 PM 8:00 AM	7:00 AM 4:00 PM
London Open London Close	3:00 AM 12:00 PM	8:00 AM 5:00 PM	4:00 PM 1:00 AM
New York Open New York Close	8:00 AM 5:00 PM	1:00 PM 10:00 PM	9:00 PM 6:00 PM

Which Day to Trade?

In fact in forex trading world, there are also particular days in the week where the forex markets tend to show more movement. Following is a table of average pip movement for the major pair for each day of the week.

Pair	Sunday	Monday	Tuesday	Wednesday	Thursday	Friday
EUR/USD	69	109	142	136	145	144
GBP/USD	73	149	172	152	169	179
USD/JPY	41	65	82	91	124	98
AUD/USD	58	84	114	99	115	111
NZD/USD	28	81	98	87	100	96
USD/CAD	43	93	112	106	120	125
USD/CHF	55	84	119	107	104	116
EUR/JPY	19	133	178	159	223	192
GBP/JPY	100	169	213	179	270	232
EUR/GBP	35	74	81	79	75	91
EUR/CHF	35	55	55	64	87	76

Before analyse the table above, the table above is created base on westen countries. For malaysian, our market time actually start at monday morning and ended at saturday morning.

Anyway, let see the table above, Malaysia Forex Trading know you are clever enough to discover that it is best to trade during the middle of the week, since this is the moment when most movement happened.

Other than that, these are some good time and bad time to trade in forex trading.

when to trade in forex

1. When two sessions are overlapping.
2. The European session since most movement happened in this session.
3. The middle of the week typically shows the most movement.

when not to trade in forex

1. Holidays. When everyone is out of market and enjoy their holidays.
2. First day and last day of the week, which tend to be thin market.
3. Major news event, which might cause you a lot of losses.

How do we make money in Forex Trading?

So how do we actually make money in Forex trading?

In the forex market, we buy or sell currencies. The object of forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

For example, you bought 10,000 Euros at EUR/USD at exchange rate of 1.1000.

So, you have -11,000 USD and 10,000 Euros for the moment

Few Weeks later, you exchange your 10,000 euros back into U.S. dollar at the exchange rate of 1.2000, and you get 12,000 USD.

12,000 - 11, 000 = 1,000 USD.

Now, you earned yourselves 1,000 USD because of different exchange rate.

Forex Education Material

After a series of introduction on Forex trading world, Malaysia Forex Trading Strongly Suggest you read through this. This  link contains a comprehensive study material on technical analysis on forex, for example, candle stick, support and resistance and so on.

Forex Terms

What is base currency and quote currency?

Currencies are always quoted in pairs, such as EUR/USD or USD/JPY.

The first currency to the left of the slash ("/") is known as the base currency (in EUR/USD example, the base currency is the Euros), while the second one on the right is called the counter or quote currency (in EUR/USD example, the U.S. dollar).

What is long position?

Long position means buy the base currency and sell the quote currency.

What is short position?

Short position means sell the base currency and buy the quote currency.