Forex is an abbreviation for foreign exchange, which refers to the conversion of two countries’ currencies against each other. Over time, after Forex transactions became popular, not only currencies but also commodities entered the Forex platforms and started to be traded as Forex products. Forex market is the highest and most liquid market in the world. According to BIS (Bank of International Settlement) data, the trading volume of the Forex market is around 5.5 trillion USD per day.
Although Forex markets were initially established on the exchange of currencies, today precious metals such as gold and silver, oil, stocks, commodities such as corn, sugar, wheat are among the investment instruments traded in the Forex markets.
Who Can Become a Forex Trader?
All kinds of private and legal persons, including individual users, private and commercial banks, institutions and central banks, can become Forex investors.
Is Forex Reliable?
Forex markets are extremely reliable. First of all, it is not possible to direct the markets with external interventions and manipulations due to the high transaction volume. Thus, the market works only with its own internal dynamics, protected from external factors.
On the other hand, we recommend that you work with licensed brokerage houses for the security of your personal investments. In this way, you will avoid problems that may arise from intermediary institutions, as you work with companies that are strong in technical infrastructure and financial terms.
In the parity expressed as EURUSD, the part you see on the left is the “EUR” base currency. The second part on the right is “USD” and is called the counter currency. When you see an expression like above, it means; It is how much USD costs 1 EUR.
You can open a long or short position in such a trade.
Long Position: Long position in Forex markets means taking the basic parity and selling the opposite parity. Continuing with the example above, opening a Long Position is to sell USD and buy EUR in return, and therefore the value in the “Buy” column is processed.
Short Position: When you open a Short Position, which means to sell the base pair and buy the opposite pair, again according to the example above, you sell EUR and buy USD. Therefore, the transaction is made over the value in the “Sales” column.
What is Lot?
A unit of measurement such as meter, kilogram, “lot” actually means 100,000 units and is the basic unit of measure used in Forex transactions.
If we elaborate further, 1 LOT means 100,000 units from the unit on the left in pairs expressed as currency pairs.
However, “lot” may not be a suitable unit for every investor. Those who prefer to make smaller investments can also use mini lots, micro lots or nano lots.
Technical analysis is an analysis method used to predict future price changes over past price movements based on mathematical calculations. With Technical Analysis, the direction of future price movements is tried to be determined with the help of graphs and mathematical indicators that reflect the price changes in the past.
Estimating the future market situation with technical analysis plays an important role in developing trading strategies for investors in financial markets.
Decisions are made on the starting time of the transaction and the volume of the transaction to be made based on the estimates made through technical analysis. Price change predictions help market traders make sound pre-trade decisions.
The feature that makes technical analysis different is to predict in which direction the balances of the market are changing and to determine the current trend.
Price movements take into account all factors that can affect the market
All factors that can affect price changes (economic, political, psychological) have already been considered and reflected in the price charts. So, the price is the basic indicator that reflects all the factors that can affect the market.
Prices always change in a certain direction
It is an important thesis in the application of technique analysis methods. The main purpose of technical analysis is to predict the direction of future price changes (market trend or trend) in order to profit from trading.
At the basis of Forex technical analysis is the “Dow Theory”. According to this theory, price changes can create three types of trends in the market;
When there is an upward trend, the next peak and bottom points in the price change occur higher than the previous one. In the downward trend, the next bottom and peak point is lower than the previous one.
The past renews itself
The movements and technical analysis that also occur in the Forex market have a close relationship with human psychology. The price charts, which have been studied for almost a century, show that certain formations have emerged on the charts. These formations reveal the “bear” or “bull” psychology of the market. It is accepted that these patterns, which have yielded good results in the past, will do well in the future. Because these formations actually originate from human psychology, which tends to never change.