Recently, many people have been asking me what foreign exchange trading is all about, so today I’ll just talk about this topic.

Actually, forex is very simple — it’s using one currency to exchange for another currency, called Foreign Exchange or Forex, abbreviated as FX. For example, if you go to the airport to travel abroad and exchange New Taiwan Dollars for US Dollars, that’s the most basic form of forex trading. Suppose the exchange rate is 0.034; you exchange 10,000 New Taiwan Dollars and get 3,400 US Dollars. In this process, you are participating in the forex market.

Speaking of the forex market itself, it is the world’s largest financial market, with a daily trading volume of up to 6.6 trillion US dollars, far exceeding the New York Stock Exchange’s 66k dollars. Moreover, this market is decentralized; global currencies are traded 24 hours a day, five days a week, from New Zealand opening, then Sydney, Tokyo, London, New York, operating in cycles, so trading can happen anytime and anywhere.

Forex market trading involves trading currencies, with traders profiting from exchange rate fluctuations. Exchange rates change every second, influenced by factors such as national economic strength, fiscal policies, and international relations. Most people participate in forex trading for speculation purposes, not because they actually need to exchange money.

Regarding forex English terminology, the main currency pairs include USD (US Dollar), EUR (Euro), GBP (British Pound), JPY (Japanese Yen), etc. These are the most traded currencies, representing the world’s largest economies. Currency codes consist of three letters; the first two represent the country, and the third represents the currency’s initial letter, for example, USD for the US Dollar.

Forex trading has many advantages. First, the transaction costs are very low; in most cases, there are no commissions, only the bid-ask spread, usually below 0.1%. Second, there are no specific trading size requirements; you can start with very small positions. Most importantly, leverage is provided, allowing you to control large trades with a small amount of capital, such as 50:1 leverage enabling you to control a 2,500 USD position with only 50 USD margin.

Compared to the stock market, the forex market has higher liquidity, faster execution, and no restrictions on short selling. Compared to the futures market, forex has relatively lower risk because platforms automatically notify margin calls or close positions to protect traders.

Therefore, the forex market, due to its high transparency, low entry costs, and flexible trading, has become an important investment channel for global investors. If you’re interested in this market, you can start by learning about the main currency pairs and gradually familiarize yourself with how the market operates.