Forex Trading= Foreign Exchange

Category: Finance, Currency Trading.

Forex trading has become extremely popular recently. What is it exactly and how can you make money from trading currencies if you are not an expert trader?

Do you know what Forex Trading is? You will find the basic knowledge in this article. Forex trading is also called" currency trading" or" FX, " short for" foreign exchange. " While foreign exchange does not get as much attention as the stock market, options and commodities do, it is nonetheless, for example the biggest market in the world. Forex Trading= Foreign Exchange. The foreign exchange market also offers investors a huge opportunity for profit. You trade in currency. When you trade on the foreign exchange, you do not trade stocks or bonds.

Basically, forex trading involves buying one currency and selling another. With forex trading, you don' t invest in a single company or group of companies as you do with stocks or mutual funds, for example. As exchange rates fluctuate, you make money or lose money. Instead, you are investing in a particular national economy. As an example, let us say that you are comparing the Japanese yen and the US dollar. You are pinning hopes on one nation's economic health versus that of another.

Your research seems to tell you that the US dollar is undervalued and will soon rise in price. In that case, you would execute a trade to buy US dollars and sell Japanese yen. Simultaneously, you expect the Japanese yen will lose some value. If you are correct, the exchange rate will go up and you will profit from your analysis. In fact, currency prices can be very difficult to predict, because so many things can cause a change in exchange rates. Even though this sounds easy, it is not, though.

You also have to remember that with currency trading, you trade in pairs. Therefore, you won' t just look at one nation's economy, but you will be comparing two. Therefore, you buy one currency while you sell another. Of course, you do not have to limit yourself to just the US dollar and the Japanese yen, for example. Therefore, if you are just starting out, I would recommend that you stick to the seven major currencies. There are many dozens of different currencies to choose from, with seven major ones. They are as follows: USD- US Dollar.

GBP- British Pound. EUR- the Euro. JPY- Japanese Yen. AUD- Australian Dollar. CHF- Swiss Franc. CAD- Canadian Dollar. If you are a small investor, you will generally concentrate on trading these particular currencies.