Forex Trading – The 24 hour market, 5 days a week.

The Foreign exchange market is a nonstop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders’ investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

Forex Trading is trading currencies from different countries against each other. Forex is acronym of Foreign Exchange.

For example, in Europe the currency in circulation is called the Euro (EUR) and in the United States the currency in circulation is called the US Dollar (USD). An example of a forex trade is to buy the Euro while simultaneously selling US Dollar. This is called going long on the EUR/USD.

Forex trading is typically done through a broker or market maker. As a forex trader you can choose a currency pair that you expect to change in value and place a trade accordingly. For example, if you had purchased 1,000 Euros in Jan 2005. it would have cost you around $1,200 USD. For the next few days the Euro’s value vs. the U.S. Dollar’s value increased. After a month 1,000 Euros was worth $1,300 U.S. Dollars. If you had chosen to end your trade at that point, you would have a $100 gain.

Some basis terms which one needs to know before taking a trade.

Forex
To start, Forex (or FX) is the name of any marketplace where a number of traders gather to globally trade foreign currencies. Trading on a Forex happens quickly and huge amounts can be won or lost in seconds. Forexes are present all over the world and can have different opening and closing times depending on location.
Spread

This is the difference between the buying and selling price of any currency. These prices are determined by individual brokers, which mean traders can undercut competitors in order to make more trades. Of course, this will come at a price for them unless they trade a sufficient amount to make up the difference.

Currency Pair
This is a general term given to any two currencies that are being exchanged for one another. The major currencies of the world are always available in a Forex, as well as many others that may be less known.

Leverage
Leverage is the name given to the amount of sway a trader has when he or she is trading with money he or she doesn’t have. The greater the leverage, the greater the potential profit (or loss).

Margins
Traders give brokers cash amounts based on margins, which means they can trade huge amounts they wouldn’t otherwise have. If the margins are called in, the trader has to repay them back immediately.

Stop Loss
The safety measure of a Forex, stop losses ensure that if traders lose money, they will only lose a portion of their investment, rather than the full amount.

Pip
A pip is a small unit of currency, usually only worth a decimal point or two. However, they can add up when taking leverage into account, so they are not to be discounted.

Long and Short
This term refers to how long a trader holds onto currency before selling it. Depending on the change in exchange rates, holding money long or short can mean the difference between losses and gains, so make sure you understand the marketplace before choosing.

What Do You Need To Start Trading Forex?

Forex Trading Skill And Experience:
You have to have the trading knowledge and experience to start forex trading online and making money. Making money through forex trading is easy, but you should learn how to do it, otherwise you will lose.

Forex Trading Account:
It is like a bank account. You open it, deposit some money in it and you can start buying and selling currencies against each other. To have a forex trading account, you should open an account with a forex broker.

Forex trading software (platform):
It is a very simple and easy to use software that gives you the currencies’ prices and the tools that you need to analyze the currency market and place your orders. When you open a forex trading account with a broker, they provide the trading platform too.