What is Forex Trading?

An Introduction to Forex Trading

Forex Foundy or Foreign Exchange
If you are not familiar, Forex (FX) is an acronym for Foreign Exchange and hence Forex trading refers to trading of currencies from different countries around the workd against the other. With over USD $2000 billion tradings per day, Forex is the biggest market in the world, practically dwarfing the stock market, and the best thing is, it is open 24 hours every single day!

You may be asking yourself: So how does anyone actually earn money with Forex? Forex traders generate profits by speculating whether a currency will rise or fall against the other. They begin by choosing a currency pair that you expect to change in value and placing your order.

For example, you spent USD $1,600 to purchase £1,000 today. Few months later, if the value of sterling pounds versus USD increases, say £1,000 to USD $2000, you would gain USD $400 when you chose to end the trade. Alternatively, one can also hold his currency pair for minutes or days, depending on his own strategy. It is commonly thought that the best money-making opportunities are with the most commonly traded currencies, namely the US Dollar, Euro, British Pound, Swiss Franc, Japanese Yen, Canadian Dollar and Australian Dollar, collectively known as the “Majors”.
Although historically only available to large financial institutions and companies, Forex is now accessible by members of the public due to the prevalence of the Internet and therefore, is a good opportunity for investors to grow their money. Contrary to common notion, you do not need a lot of money to start trading Forex. Some people even start with as little as USD $200.

While there are people who make a living by relying solely on Forex trading, it is important to be realistic with your expectations, especially if you are a beginner. As easy as it sounds, learning the correct strategies and practicing with paper trading before using real money can save you from losing your hard-earned cash. After all, no investments come without risks and it is how you manage the risks involved that will make the difference.

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