When To Buy And Sell On Forex?

The Forex market is open 24 hours a day, five days a week. In fact, the international currency market consists of banks, different commercial firms, central banks, hedge funds, investment management firms and retail Forex brokers and investors worldwide.

As a novice trader, you should understand the process of buying and selling in the forex market, including what to buy and sell and when to buy and sell.

Actually, you can trade in almost any currency. Most forex trading uses several currencies known as major currencies, namely US dollars, Euros, Pounds sterling, Japanese Yen, Swiss Francs, Canadian dollars and Australian dollars.

All currencies are quoted in currency pairs. Forex trading has two sides, namely when someone buys one currency in an currency pair, then another individual sells another currency.

Note that not all currency pairs are available at most forex brokers. However, many currencies can be traded against the US dollar.

For example, traders can trade US dollars for Thai baht. However, exotic currencies such as the Thai baht are usually only traded against the US dollar at a few forex brokers.

When To Buy And Sell On Forex?

So, when can a trader buy and sell the currency pair he chooses? Simply put, traders make a profit by ‘betting’ that a currency’s value will appreciate or depreciate against other currencies.

For example, when you buy US dollars and sell Euros, you are betting that the value of the dollar will increase against the Euro. If the value of the dollar does increase, then you will make a profit.

Forex trading is all about making money from winning those ‘bets’ and cutting losses when the market goes the other way. Profits as well as losses can be increased by using leverage in the forex market.

However, novice traders should try to make a profit first and only use leverage after learning how to be profitable consistently.

In addition, the forex market is the largest financial market in the world. In 2019, the forex market recorded an average daily trading volume of over $6.5 trillion.

This large trading volume certainly makes the forex market have very good liquidity. This liquidity certainly benefits traders and reduces transaction costs.

All trades are conducted on an OTC (over-the-counter) basis which allows trades to be made 24 hours a day during business days.

There are several factors that influence currency pairs, namely:

Political events

Currency values ​​can be affected by government instability, changes in government to corruption. For example, the value of the dollar jumped when President Donald Trump was elected.

Economic policy

Novice traders should understand the forex market from a fundamental analysis point of view, such as monetary policy, Gross Domestic Product (GDP or Gross Domestic Product), unemployment to fiscal policy, which have an influence on currency values.

Technical analysis

Beginning traders who embrace technical analysis tend to look to key price levels (support and resistance), trends, and other indicators to form the basis of their forex trades.

One important thing for novice traders is to understand risk management. This includes not only a positive risk/reward ratio, but also understanding potential changes in volatility.

By applying proper risk management techniques, it is possible to properly manage the factors affecting the forex market and prevent the labor effect of your trades.

Buying and selling forex can be tricky. It’s important to understand the mechanics behind it before starting to trade, such as how to read a currency pair. Now you can determine, when to buy and sell on forex.