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What is Forex? 101 basic things to
know about forex trading
Thanks to the dense advertising, always sanctifying Forex trading like a money printing
machine or making money with just one click, has made forex become the most interesting
field today.
The financial market in the 4.0 technology era is making business opportunities more open
than ever, with many different financial investment channels such as securities , real estate,
gold investment , stocks ... Among them This would be really incomplete if we ignored Forex,
one of the extremely attractive and potential investment channels. However, because it is
considered a "gold mine", Forex has been exploited by many bad guys, causing investors to
have a wrong view of Forex. So what is Forex ? Is Forex Trading Gambling or Investment?
What is Forex?
Forex stands for Fo reign Exchange, i.e. international currency exchange. Forex market (
foreign market) exchange market) is where the currency exchange activities of countries
take place through the banking system and credit institutions.
In fact, forex trading is a familiar activity, which any individual, even though not directly, is
also indirectly involved in this work.
Thanks to global trade, the goods we use can be goods imported from a certain country from
Japan, Korea, the United States or European countries... Buyers will only use money Local
currency can be Vietnamese currency to buy the above products.

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But this very act of buying imports shows that you are engaged in forex trading. Because the
company importing the product will have to convert foreign currency from VND into the
currency of that country to buy the product. And if the company sells this product to anyone,
the money from the sale goes back to the supplier to continue to import the product and sell
it to their customers. So, although forex is "strange", it is actually very "familiar".
Or actions such as travelling, studying abroad, etc., having an exchange between local
currency and foreign currency is the clearest proof of an individual participating in forex.
Forex trading: buy and sell what?
Although, forex at the present time offers traders 600 different products such as
commodities, precious metals, stocks, cryptocurrencies, bonds, indices... but of these forex
currency pairs still occupy the vast majority. the majority and most traded traders today.

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And Money will be the only thing for you to participate in forex trading, whether the product
you want to Buy or Sell is gold, oil, corn or soybeans. Because forex trading uses CFD
contracts for difference based on price fluctuations to make a profit without the trader having
to own the product, or hoard any kind of commodity.
Forex Investment: A Beginner's Guide to Forex Trading
Liquidity: the stock market is just a "baby fish" compared
to the foreign exchange market
The forex market operates continuously 24/5 from Monday to Friday every week. Unlike the
traditional market, the forex market does not have a specific transaction centre, but through
terminals to connect. So as long as you have an internet connection, you can trade forex.
In just 10 years, forex trading volume has nearly tripled.
The reason for this is because Forex is traded in the form of a decentralised OTC, where the
brokers, the participating parties will exchange directly with the other party without having to
go through any 1 floor or "ground". ” (marketplace) but will go through the “counters” of
traders and dealers ( such as retail traders, transacting with brokers through MT4 software ,
without having to go to a new location or office). tradable ).
According to data in 2016, of the Bank for International Settlements (BIS), the average daily
volume of forex transactions reached over 5000 billion USD, 20 times higher than the US
stock market and 15 times higher than the US stock market. US bonds.
However, this has grown to $6595 billion in average daily trading volume in 2019, still
according to the BIS .

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It can be seen that forex is really a potential market. Surely with this momentum of
development, forex trading will not stop at 6.6 trillion USD but will increase higher and higher
in the not too distant future.
Banks are an important factor affecting the exchange rate
in Forex
In fact, there are many different actors involved in trading every day. Among them, the
largest are Tier 1 pricing providers including commercial banks and investment banks, which
account for about 60% of transactions in the foreign exchange market. Their clients are
smaller banks, large multinational corporations, large hedge funds, as well as forex brokers
or retail market makers. In addition, central banks are also involved in forex in order to
stabilise their country's currency.

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Top 10 largest forex service providers today. Source: Euromoney
Traders are classified as the "lowest class" among the above components, so when the price
reaches the trader's hands, he has to go through several different "doors" of intermediaries,
not to mention having to pay a few extra fees from the floor. Forex collects such as: swap fee
(if the order is left overnight), spread fee, commission fee.
Central bank
The central bank acts as a coordinator of market activities, influencing the market either
directly or indirectly depending on the stage of the economy. The tools used can be the form
of money injection or withdrawal through fiscal policy or monetary policy. The central banks
that have the most influence on the market include: the US Federal Reserve ( FED ), the
Bank of England ( BOE ), the Bank of Japan ( BOJ ), and the European Central Bank (ECB).
), Bank of Canada ( BOC ), Reserve Bank of Australia (RBA), Reserve Bank of New Zealand
(RBNZ).
International Monetary Fund
Governments and banks will sometimes have to borrow money from international lending
agencies and institutions such as the World Bank, especially the International Monetary
Fund ( IMF ) and the International Finance Corporation (IFC).

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They will lend to developing economy banks on a variety of terms, primarily to finance social
projects, including infrastructure development, or to stimulate economic activity in the region.
1 priority area.
Trading company
An important part of the forex trading market comes from the financial activities of
commercial service companies to pay for goods and services. Compared to banks or
speculators, these companies will trade forex in less volume, and also have little impact on
market interest rates. However, trade flows are an important factor in the long-run direction
of exchange rates. So some multinational companies can have a huge impact on the market
if they hold a large money supply.
Commercial Bank
The place where all orders and market liquidity are executed. Therefore, commercial banks
are considered as one of the most important departments, without which the market cannot
function. Simply put, commercial banks receive money from sellers and sell money to people
in need, thereby creating a cash flow that promotes economic development.
Investment funds
Investment funds enter the market for the purpose of investing and making profits. The
volume of money used to participate in the market of these funds is extremely large, typically
SPDR's gold trading fund, for example. However, due to the large amount of money and the
professional analysis team, the funds often look at trading in the medium and long-term
direction.
Brokerage, forex broker
The brokerage company acts as a bridge between individual investors and institutions to
participate in the market. In the previous stage, when the forex market was just a playground
for individuals with money, it was often necessary to have a capital of $100,000 (more than 2
billion VND) or more to be able to participate in forex trading.
However, thanks to the appearance of the forex floor , it is possible for traders to participate
in forex trading with a very modest capital with only a few dozen dollars. Even with just 1$
you can buy, sell and trade at some forex brokers.
As mentioned, the forex broker is essentially an intermediary between retail traders and
liquidity providers. So the job of the forex broker is to find a price provider and use this price
to provide it to traders. Because there are many liquidity providers, the price may vary
slightly, depending on the partner that the forex broker chooses.

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As an intermediary distributor, the price is coordinated to the trader through the broker.
Therefore, there will be two main types of forex brokers: an order-holding forex broker
(Market Maker) and an order-push forex broker ( ECN floor ).
To put it simply, a forex broker or broker is almost like a writing secretary. Responsible for
recording numbers from retail customers, then sending these numbers or tables to the topic
and receiving a commission. But a lot of secretaries instead of transferring the board they
will keep or "hug" the board to get more money. If in the table of secretaries, no one wins,
then they will eat big, and if someone wins, they will have to pay this amount themselves to
those who write from them.
Forex brokers work in a similar way (only the organisation and many other stages will be
much more sophisticated). The exchange can also accept orders from the trader himself to
earn commissions and spreads. As for the real ECN exchanges, the exchange will push the
order to a partner providing liquidity. And the forex broker will only benefit from the trader's
commission.
However, traders must go through a forex broker, because we are just "baby fish" buying or
selling a too small amount, so it has almost no impact on the market.
That's why, now there are many fraudulent forex brokers trying to steal traders' money. So to
avoid mistakes, choose a reputable forex broker to trade.
Top most reputable forex broker today
Trader or individual investor
You or I, who are reading this article, are all retail traders, and are also the most "lowest
throat" among the participants in forex trading! Not only do not enjoy good prices, but in
many cases, unlucky transactions at unreputable forex brokers, they also have all their
money, resulting in "losing both leads and fishing". In fact, any profession has its own pros
and cons. And to participate in this market, always be a sober forex trader, unwise under any
circumstances.
Forex market never sleeps – Forex trading sessions
In addition to high liquidity Forex is probably the only place that helps investors make money
24/5 if they can afford it! Thanks to 4 main trading sessions, located on 4 different
continents, the forex trading session is also known by shorter names such as: Australian
session (Sydney), Asian session (Tokyo), European session (London) and American session
(New York).

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Trading sessions are continuous, one after another, one session after another, as you can
see in the time frame in the image above. You can have breakfast and trade Asian sessions
with a financial centre in Japan. After the lunch break, work will continue with the European
session. At the same time, it is possible to end the business day with an American session.
In particular, the forex market does not distinguish who you are, where you are and what
your finances are like, as long as you have an internet connection where you live, there is
absolutely a place "to trade and work".
Why is Forex considered a money printing machine,
helping with financial freedom?
High liquidity
Liquidity is the speed of converting goods or assets into money, the faster the conversion
speed, the higher the liquidity. If anyone has ever invested in Vietnamese stocks, the time
from buying stocks to selling stocks takes 4 days. However, if you join the forex market, that
time will be counted in seconds, even thanks to the application of some advanced
technologies such as ICMarkets, for example, the time from placing orders, transferring
orders to the floor and matching orders. only 40 milliseconds!
Two-way buying and selling market

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A two-way trading market allows you to profit both when the market is up and when the
market is down. If based on technical analysis, or some other source, or you believe that this
currency pair is in an uptrend, you will choose to buy or buy. On the contrary, if you think the
market is falling, you will choose to sell or Sell.
So compared to stocks, it is clear that forex investors have 2 choices, and in any situation,
traders have the opportunity to profit. So, forex really never goes out of style.
In addition, you can trade forex anywhere, anytime, whenever you want! Even if you are
enjoying the travel but still fully earn money. A profession that does not have a "retirement"
like forex, you can completely trade until old age, as long as you can afford to stick with the
market.
High financial leverage
This is perhaps the most impressive advantage of forex. Without leverage, traders will never
be able to trade forex with a small amount of money, from a few coins to a few hundred
dollars, several thousand, even tens of thousands, hundreds of thousands of dollars.
So before the internet, there were brokers or liquidity providers who created forex "games"
with leveraged rules, forex was really just a "playing ground" of the "big players" in the
market. banking schools, investment funds. Or only a few outstanding individuals like
George Soros can participate.

10.
After the Bretton Woods Accord agreement ended. In 1971, under the Smithsonian
agreement, established by a group of the top 10 countries in the world, it accepted a floating
exchange rate, allowing currency fluctuations to expand from 1% (according to the
agreement). Bretton Woods Accord) to 2.25% against the USD. Thanks to that, the
currency's fluctuations are actually extremely small, almost hard to notice, unlike BTC, each
change can increase or decrease by 100 USD.
Therefore, to be able to make a profit, you must have a large amount of money to buy and
sell. If there is not enough money to work on, it is very obvious that it is impossible to
participate in forex trading.
However, “financial leverage will be pleased to sponsor this program, helping players who
only need a small amount of capital to still trade with a larger volume to make a profit.
Suppose you deposit 100 USD into a certain forex broker, with that much money it is very
difficult to trade. However, if you use leverage of 1:500 you will win a maximum of 0.5 lots.
Thus, leverage has helped traders a lot in the forex trading process. With some brokers like
Exness with a maximum leverage of 1:infinity, FBS floor will be 1:3000, while ICMarkets will
only let you enjoy a maximum of 1:500.
See more:
Exness forex broker review
ICMarkets forex broker review
FBS forex forex broker review

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XTB forex broker review
Anything has two sides and it is not without reason that many people think that leverage is a
double-edged sword. It helps traders make money from forex with a small amount of capital,
but the leverage itself will also make the account "burnt out", if too much blood is lost and
you don't know how to manage capital.
Transparent information
One financial report in Vietnam and one in the US, which one would you rate higher? As the
economy gets bigger, quality and reputation always come first. The forex market provides all
information at the same time, anywhere in the world, economic calendar - economic events
are announced to investors in advance, so that they can grasp the information. and trade
planning.
Most traded currency pairs in Forex
The reason forex can be bought and sold in two ways is because it is always traded in pairs.
When you buy one coin, you are also selling the other.
In forex there will be 3 types of currency pairs for trading: Majors, Cross pairs and Exotic
Pairs.
To better understand the 3 currencies mentioned above, you can refer to the following
articles:
Major currency pairs in the Forex market
Below is a table of the top 9 most traded currency pairs today
Currency pair name Symbol Currency Mass
transaction
(%)
EURO/US DOLLAR EUR/USD
Major currency
pair
55%
BRITISH POUND/ US DOLLAR GBP/USD
Major currency
pair
ten%
AUSTRALIAN DOLLAR/ US
DOLLAR
AUD/USD
Major currency
pair
6%

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EURO/JAPANESE YEN EUR/JPY
Cross currency
pair
7%
US DOLLAR/CANADIAN
DOLLAR
USD/CAD
Major currency
pair
5%
US DOLLAR/SWISS FRANCE USD/CHF
Major currency
pair
4%
US DOLLAR/ JAPANESE YEN USD/JPY
Major currency
pair
4%
BRITISH POUND/ JAPANESE
YEN
GBP/JPY
Cross currency
pair
3%
EURO/BRITISH POUND EUR/GBP
Cross currency
pair
2%
Certain terms must be known when trading forex
In any profession, there will be highly specialised terms that need to be understood in order
to join. In particular, in conversations between traders, if you do not understand, you will not
know what they are saying. For example, “ I just got 10 gold pips today”; “ I just stopped
losing 2 lots EURUSD”; “Why is this floor spread so wide?” or “Is the com fee on this forex
broker high?”…
And of course, no one has the time to sit down and explain to you what each Pip concept is,
what a lot is, what is a com fee or a commission fee. If you want to get into forex, learn these
basic concepts first.
You can refer to some of the forex terms we need to know as listed below to understand the
forex market better.
What is a pip?
What is lot?
What are spreads?
What is financial leverage?
What is the overnight fee?
Instructions on how to open a forex trading account

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What are the steps involved in forex trading?
It is also thanks to the development of marketing communication that many people believe
that forex is really an attractive profession. However, no road is strewn with roses. To reach
the top of glory, all must go through many different thorny stages. Forex is no exception!
Therefore, you should slowly and slowly enter the market. Equip yourself with all the
necessary knowledge, even learn from the simplest things, familiarise yourself with all the
concepts and terms in forex, before thinking about making money from forex!
There are many ways to access knowledge, for those who are new, start with the most basic
things. You can check out our forex investment guide article , for the full forex trading
process.
In addition, in the category of forex classes compiled by kienthuc forex , there are not only
articles but also a lot of videos, presented from basic to advanced, to help you grasp the
most necessary things to learn. participate in forex trading.
The most detailed and methodical forex investment guide
Join forex class with kienthuc forex
You can also refer to the most basic and concise process below to understand what steps
are involved in participating in forex trading.
Step 1 : Find a reputable forex broker
Step 2 : Register for a forex account at the forex broker

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Step 3 : Download MT4 software, log in to MT4 software
Step 4 : Deposit money into your account
Step 5 : Find a currency pair to place an order, then you can close the order if profit or loss.
Step 6: If the transaction is profitable, you withdraw your money, if it is burned, continue the
cycle from step 4 onwards.
Should you choose forex trading or stock investment?
I mentioned above that the liquidity size of securities compared to the foreign exchange
market is many times lower. Even at this time, many forex brokers are so agile that trying to
convert how to trade stocks at the forex broker feels "real" like at the underlying stock
exchanges such as allowing dividends, no overnight fees, commission fees…
Because of that, more and more traders are turning to stock trading. But to help you better
understand the differences between these 2 forms, to make the most informed decision, let's
take a look at the table below:
Forex Stock
Trading products
Currencies, stocks,
metals, agricultural
products, stocks, energy...
Share
Transaction time
24/24 (2 days off on
weekends)
From 9 a.m. to 4 p.m. (2
days off on weekends)
Lever 1: 500 (medium) 1:2 (average)
Minimum deposit 1 USD 50 USD
Support software MT4/MT5/cTrader Amibroker
Exchanges Decentralized OTC
Over the counter or
decentralized
Transaction fee Free of charge Take charge
Order matching
mechanism
Immediately T+1 or T+2

15.
Short sell Allow
Depending on the location,
usually none
Epilogue
Thus, it can be seen that forex is really a trading market of the financial industry with all
participants being "big hands", not small individuals.
So this is really an attractive job, generates huge profits, comes with a leisurely job, opens
the laptop in the morning and enters a few orders. Then wait, or sometimes it only takes a
few minutes to make a profit. Even, with just 1 entry, you get $1,000. It's both leisurely and
easier to earn than many other jobs. You don't have to lose your face from 5:00 to 6:00 a.m.
to 6:00 p.m. to 7:00 p.m. to go home, working for 30 days "all like squeezing lemons" is not
as good as that one click! Hearing that, everyone wants and dreams of being able to reach
that "realm".
According to Maslow's pyramid, the highest human need is "self-expression". Dale Carnegie,
the master of communication, the author of the very famous book "Getting People's Mind"
said that every human being has an "illusory lust" which is "wanting to prove oneself, always
wanting to be promoted." ego." Simply put, this is the praise and admiration of others for

16.
you.
And when participating in Forex trading, it will not be difficult to be admired by others for the
level of talent, and also to have an abundant and rich life. Even if you just say what industry
you do, there will be a lot of admiring eyes on you. Especially when you show off your
account of fighting "hundreds of battles, hundred wins", not only one person "begs to die" but
also hundreds of people have to be in awe of you.
Not only that, if with other professions to achieve glory, you will have to suffer oppression
and injustice from many relationships in society.
Forex is not like that!
You don't care who is behind this machine, just deposit money, enter orders, win and gain,
lose and lose, stay at home every day. If the above scenario happens to you. You will
probably be below a few people and above many. Something everyone wants! Especially to
get rid of everything, to be free both financially and mentally. Therefore, forex is attractive to
many people and it is not surprising.
But, another word but, a lot of people have had to give up forex, which according to statistics
up to 95% of people have ever joined. Therefore, forex can be for many people, but not
everyone can survive and survive in this extremely harsh market.
You need to start slowly. The most important thing is to have a serious investment plan, have
technical analysis knowledge, know how to manage capital effectively so that you can fight

17.
with the teacher named Market. We hope everyone who reads the article “What is forex” will
reap the sweet fruits in the not too distant future. Good luck!
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