What is forex trading ? Foreign exchange business is the exchange of assets, vehicles, etc. on the international market. If you are a long-time trader, determining what forex trading is is very simple. However, for those who are new to the forex market, this is not the case. Therefore, to help you better understand what forex trading is, I have compiled the most detailed information here. What is forex trading? What is Forex? Many people when asked what foreign exchange is, often think that this is foreign currency. However, this whole sentence is correct but not really complete.

1. What is forex trading? How to limit risk
in the forex market
What is forex trading? The foreign exchange business is the exchange of assets, vehicles,
etc. on the international market. If you are a long-time trader, determining what forex trading is is
very simple. However, for those who are new to the forex market, this is not the case. Therefore,
to help you better understand what forex trading is, I have compiled the most detailed
information here.
Many people when asked what foreign exchange is, often think that this is foreign currency.
However, this whole sentence is correct but not really complete.
The term foreign exchange when used in the economic field is used to refer to the means and
instruments of payment that carry value and are used in international transactions. It can be
understood that when countries buy and sell products, services, etc. and use instruments for
payment, it is called foreign exchange.
Foreign exchange includes Foreign currency, also known as foreign currency in circulation in a
country. Some means of payment such as Orders, checks, and drafts (To be paid in foreign
currencies to maturity). Gold is the foreign exchange reserve of a country. Documents valued in
foreign currencies such as stocks and bonds. The domestic currency of a country when
circulating outside another country and used for international payments is also called foreign
exchange.
What is forex trading?
Forex trading is the buying and selling of instruments, assets as well as payment instruments
also known as foreign exchange. Foreign exchange will belong to organizations and individuals
in the international market in order to make a profit between their price difference.
Previously, foreign exchange trading only took place between banking institutions, investment
funds, etc. These organizations would do business under the direction of the State Bank owner
for the purpose of implementing the country's monetary policy. . Besides, this business also
meets the foreign currency needs of customers.
However, today with the development of technology, organizations and individuals are also
entitled to participate in forex trading. This form is called trading on forex.
So what is forex trading? In essence, forex trading is a form of margin trading through an
account and is opened by a broker. The net value of this account will continuously fluctuate
according to asset values ​
​
(gold, stocks, bonds, raw materials, commodities, ...). Traders will
trade assets on their own accounts.

2. Buying and selling are also relative. You only really realize your profits and risks when you take
profits and stop losses. The difference between the asset value and the capital level will be your
profit or loss.
Best currency pairs to trade in forex trading
In the forex market, traders can trade a lot of different assets but mostly foreign currencies.
Currencies between countries will be traded in pairs on the foreign exchange market.
For example, The US dollar or USD and the Euro will be denoted as EUR. These 2 currencies
will create together into 1 EUR/USD pair. This currency pair will sometimes be denoted as
follows: EUR.USD, EUR/USD or EURUSD. The positions of the coins will be fixed and do not
change over time. This can be understood as only the EURUSD currency pair without the
USDEUR currency pair.
In the forex trading market, currency pairs are divided into the following groups: cross, major,
and exotic.
Major currency pairs include USD and 1 currency of a country or region that has a thriving
economy. Some countries and regions can be mentioned: Australia, Japan, ...
Cross currency pair (cross): This is a combination of 2 currencies in 2 strong economies in the
world excluding the USD. 7 currencies are arranged in pairs: AUD, JPY, CAD, EUR, NZD, and
CHF.

3. Exotic currency pair: Includes strong currencies combined with a currency of a small country
with a weak economy. Examples of strong currencies are USD and EUR. Weak currencies are
ZAR, MXN, and TRY.
A detailed Forex tip from A to Z for beginners.
Popular currency pairs in forex trading
Although in the forex market, there are many currency pairs that are traded on a daily basis.
However, in forex trading, traders are usually only interested in a few influential and important
currency pairs.
Some of the most popular currency pairs in the forex market are:
The 7 major currency pairs are AUD/USD, USD/CAD, EUR/USD, GBP/USD, USD/CHF,
USD/JPY, and NZD/USD.
Cross-currency pairs such as EUR/JPY, EUR/AUD, EUR/GBP, GBP/JPY, AUD/JPY, and
NZD/JPY.
The most used currency pairs in forex trading
In the forex trading market, there are three most commonly used currency pairs:
EUR/USD: In forex brokers, this currency pair has the most advantages. The reason is that
EUR/USD has widespread, high liquidity and a huge trading volume. Besides, the economies of
these two currencies are also the two most influential and powerful economies. The global
economy will be clearly reflected in the direction of this pair. That is why any trader when trading
is interested in it.

4. GBP/USD: In the UK, the economy is tightly controlled by the government and all transactions
are transparent. Besides, the buying and selling activities at him are always fair. Therefore,
information related to the British pound is always of great interest to many people. This is one of
the most volatile currency pairs in the forex business. Therefore, this is a potential opportunity
for investors looking for high-yielding currency pairs.

5. USD/JPY: Currently, Japan is one of the leading economies in the world. Therefore, the Yen has
a significant influence on the economies of many countries. In trading, this currency pair is only
behind the EUR/USD pair.
What are the factors that affect forex trading?

6. First, when it comes to factors affecting forex trading, it cannot be through the law. This is a
prerequisite factor you need to understand when conducting forex trading.
Currently, only individuals and organizations permitted by the Government and State banks can
conduct foreign exchange transactions. Those organizations and individuals include the
following: Commercial banks, hedge funds, investment funds, financial institutions and credit
institutions. And other individuals or organizations trading foreign exchange without the consent
or permission of the Government or the Bank will be considered illegal. When committing this
crime, the violator must bear the corresponding penalty according to the law of Vietnam.
The law in Vietnam does not have a legal system for foreign exchange transactions. Therefore,
if there is a risk, it will not be protected by law. Therefore, when you want to participate in the
forex market, it is required that Vietnamese citizens should participate in reputable markets.
Besides, choosing a broker is equally important. If you can do these two things well, you no
longer have to fear the feeling of losing money.
Find out more specifically about whether investing in forex is legal in Vietnam!
Information
One of the equally important factors affecting the forex market is information. Information when
affecting foreign exchange transactions will be divided into 2 types: inside information and
outside information.
Information inside
These are relevant information and arise within the market itself. This information will be
reflected through prices, candles and charts. The information related to the market is reflected
very specifically through the above means. Therefore, each trader will have his or her own view
of them very differently. The treatment or analysis is not the same at all.
External information
This is information related to financial and economic issues occurring in a number of countries
that are announced to the outside by the central bank of that country. This information will cause
the value of the country's domestic currency to change in value. From there, affect the currency
pairs related to that currency. In addition, external information is also understood as information
about brokerage transactions, analytical knowledge, forex trading, contests, etc. This
information will appear a lot on forums. forex.
Therefore, the filtering and processing of information for each person is very different.
Depending on the level of each trader, the approach and analysis are not the same. Sometimes
that approach is optimal for one person but limited for another.

7. Finance
One of the three important factors affecting forex trading that cannot be ignored is finance.
This is considered the most important of the factors. The reason is, with finance, the forex
market was born.
Forex trading with strong financials will be very different from ordinary people. So finance will
make a huge difference.
Finance will help the market differentiate very clearly as follows:
People with strong finances will always tend to deposit money non-stop and are provided with
VIP account types, enjoying better benefits than regular accounts.
People with strong finances will also be able to use better trading tools. Therefore, the forex
business will go more smoothly than the average person. However, in this case, we are only
talking about people with strong financial resources and knowledge of forex.
For those who have strong finances, the amount of capital they spend to trade forex is very
large. Because of that, their goals are also higher than the rest. Financial factors can lead to
differences in trading strategies and trading styles.
It can be seen that the financial factor will help you go faster, but it does not mean that people
with weak financial resources will fail. In forex trading, only those who have enough bravery and
knowledge can succeed.
Capital management is one of the important factors affecting effective Forex trading or not!
Limiting risks when trading forex

8. To limit risks when trading forex, you need to understand two factors: knowledge and attitude.
Knowledge
Perhaps when doing anything to be successful, knowledge is needed. Forex trading is no
exception. Knowledge is a prerequisite that traders need to have when participating in forex
trading. Your success or failure in the forex market will be determined by the knowledge you
have.
With good knowledge, you can easily recognize which reputable forex broker should join. When
choosing a reputable forex broker, you will limit some unnecessary risks.
If you have good knowledge, you will easily filter out both internal and external information.
From here, you can come up with suitable trading strategies and goals. A trader should know
what information to get and what to ignore.
Besides, good knowledge will also help investors determine the price of inside information about
the market. Through price charts as well as data from the past to predict future trends.
Accurately identifying the market trend will help you maximize profits and minimize risks.
Attitude
Don't be too ambitious. Sometimes personal ambition will only make you fall into the market trap
due to impatience. The desire to make a quick profit from forex trading will make you a moth. In
the forex market, no one can become rich overnight. Therefore, what traders need to do is to be
alert to the lures as well as bottomless traps.
Should be serious. When participating in forex trading, investors should have the most serious
attitude. If you are really serious about your work, then success will also come to you quickly.
When you consider forex trading as a job and provide a stable income then you will
automatically take it seriously.

9. If you are serious, then you will spend time to learn, learn about the market without knowing
what boredom is. From there, a thorough understanding will help traders not to fall into the traps
of the market. As well as achieve the goals you have set.