Essentially, trading is the purchasing and selling of various financial instruments. You are a trader who desires to earn a profit by purchasing and selling various goods.
Trading is based on probability and has nothing to do with absolutes. Because of this, there is always the chance of loss, and a trader can never assure himself against loss. You purchase (or “go long”) a product with a price of x and hold on to it. You are taking this move because you believe the market for the product you have purchased will begin to rise. If this occurs, you will earn a profit by selling the thing you purchased at x for y.
This argument is applicable to numerous marketplaces, with FOREX being one of the largest.
“going short” refers to making a profit from a sell. We enter into an arrangement with another party when we “short” (sell) the market. We anticipate selling them at the present pricing at some point in the future. In this agreement, the purchasers believe the market will increase, allowing them to earn a profit. However, sellers anticipate a market decline in order to generate a profit.
FOREX refers to all international marketplaces where foreign exchange is exchanged utilizing the exchange rate between one country’s currency and another country’s currency.
The FOREX market is one of the world’s major markets that allows investors to engage in leveraged trades (that is, a system implemented by brokerage houses that allows its customers to trade above the investment amount).
In addition to the currencies of many nations, this market also processes gold, silver, coffee, wheat, etc.
The FOREX market eliminates risk by establishing a rate at which transactions can be executed. Speculating entails the ability to simultaneously buy or sell different currencies and profit from the increase or depreciation of those currencies.
Considering that central banks around the world transfer between two and three trillion dollars each day, no central bank is capable of affecting this market for even a moment.
Traders in the FOREX market invest a little portion of their assets in order to maintain huge positions. Consequently, it is possible to assert that currency trading has no relevance to the micro economy.