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What is forex trading?

Forex trading is foreign exchange trading. In this market, they exchange currencies and collect profits from the differences between rates. The forex market is decentralized, and it has no platform or owner. Currency trading takes place between banks and financial institutions around the world. 

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Thanks to decentralization, trading takes place 24 hours a day, seven days a week. Saturday and Sunday remain weekends. Trading activity is increasing and fading in different regions of the world, which is why forex is divided into trading sessions: 

  • European (London and European capitals)

  • American (New York)

  • Asian (Tokyo, Singapore and other Asian cities)

Online forex trading - basics 

The very process of trading consists, in fact, of selling one currency for another. The tourist makes a basic transaction by changing his money for the currency of the country where he is on vacation. Thus, he enters the market with a daily turnover of 5 trillion dollars. 

A retail trader, in principle, does the same. He buys the currency (it is called a long position) and waits for the price to go in the right direction. And then he sells the currency (it is called a short position). He earns from the difference in rates. The greater the volume of transactions, the greater the profit. 

The trader trades at least one micro lot ($1,000) during the transaction. It is possible thanks to brokers who provide leverage and tools for trading. Thus, for 100 dollars, you can place deals for 50,000 or more. But along with leverage, the risks increase as well. The more leverage you have, the more you can earn - but the losses from trading forex also increase.

A trading pair consists of the base currency and quote. For example, EUR/USD - in this pair, EUR is the base currency that the trader wants to buy. The dollar is the quote currency that a trader sells to buy the euro. Pairs are divided into three large categories:

  • Majors - currency pairs that include the dollar. For example, GBP/USD, USD/JPY.

  • Minority pairs - include one of the three major currencies of Forex - EUR, GBP, JPY.

  • Exotic - they have at least one major currency. USD/SEK, USD/HKD, USD/SGD.

Regulation of the forex market

Online forex trading is regulated by the laws of the country where the trader is located. All major brokers meet certain standards. In Singapore, the market rules are set by the MAS central bank. And the list of international regulators includes:

  • Great Britain - FCA (Financial Conduct Authority) 

  • Cyprus - CySEC (Cyprus Securities and Exchange Commission)

  • Belize-based global regulator - IFSC (International Financial Services Commission) 

  • United States - NFA (National Futures Association)

The popularity of forex trading

Retail trading accounts for 5-6% of the global forex market. In monetary terms, the turnover is about 300 billion dollars daily. For comparison, the turnover of the New York Stock Exchange reaches only 6 billion a day. 

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Reasons for the popularity of forex trading:

  • Additional income for a trader

  • A minimum deposit of up to $100 is required for a start.

  • You can customize your trading style to suit your needs and personality.

  • You can trade anytime and anywhere. 

Trading forex in Singapore can be a profitable business. Analyze the events of 2020, follow the trends and make a profit!