Forex trading is the simultaneous buying of one currency and selling of another, for example, buying Euros and selling U.S. dollars.
The price at which this is done is the spot foreign currency exchange rate. If you have ever exchanged foreign currency
at a bank or airport, then you are already familiar with foreign currency exchange rates. It is nothing more than the
value of one currency in terms of another currency.
Earning profit from forex trading is just like earning profit from trading any asset: you want to buy low and sell high,
or sell high and then buy back low. For example, if a forex trader believes that the Euro will weaken relative to the U.S. dollar,
then the trader can sell Euros against U.S. dollars. This is referred to as being "short Euros against the dollar" which,
from a forex trading perspective, is the same as being "long dollars against the Euro". If the Euro weakens against the dollar, then the
position will profit.
Now, if you had no choice but to buy or sell foreign currencies with the teller at your local bank
or at a public currency conversion center, then it would be very difficult to earn profit because of the wide currency spread
charged by these institutions. What is needed is another way, a better way for an individual investor to trade foreign currencies
and this is what the retail forex market provides.
THE FOREX MARKET
The forex market is an over-the-counter market for buying and
selling foreign currencies that began out of necessity from burgeoning international
trade and investment and has since grown to become the largest, most liquid market in the world. It is a wholesale market whose
participants are primarily large banks and
other financial institutions that deal in a typical transaction size of $5 million and this put the forex market outside of the
participatory reach of the retail trader until very recently.
Thanks to modern technology and industry innovation, a retail forex market has emerged that shares many of the trading
advantages of its wholesale counterpart. Individual traders such as you and I participate in the retail forex market
through the online forex trading platforms provided by the
forex broker. These platforms allow
traders to deal quickly and easily on a relatively tight bid/ask spread even with a small transaction size, thus opening
up a whole new world of possibilities for efficient forex trading.
MAKING MONEY BY TRADING FOREX
Of course, having access to online forex trading does not mean that it is now easy to become wealthy. The forex market only provides
you with the opportunity to buy and sell foreign currencies quickly and easily. Making money by online forex trading will depend upon your ability
as a trader and this is a learning process. This web site will provide an educational foundation to help the beginning forex trader get started.
You can continue the journey to becoming a forex trader with these professional-grade forex trading
books and courses and then practice your skills in a free forex demo account.
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