What is Forex Trading

Forex Markets are markets in which currencies of various nations are traded.

Forex Trading is the art of trading currencies of various countries between each other to make money.

Forex is also called foreign exchange. There is a huge demand of exchanging currencies which make forex markets the most traded and most liquid markets in the world.

Four major currency pairs are usually used for investment purposes.They are:

  • Euro against US Dollar,
  • US dollar against Japanese Yen,
  • British Pound against US dollar and
  • US dollar against Swiss Franc.

Forex is an acronym of Foreign Exchange and synonymous with term: currency trading.

  • If you thought the Euro will go up in value and the US Dollar will go down in value then you would buy the EUR/USD.  
  • If on the other hand you thought the US Dollar will go up in value and the Euro will go down then you would sell the EUR/USD.
Currency trading involves purchasing one currency and selling another from Monday to Friday. Since careful examination of various data and variables before trading currencies is a must in Forex trading, people who trade in the forex markets devise their own trading system.

The foreign exchange market is unique because of the following characteristics:
•    its huge trading volume represents the largest asset class in the world    
      leading to high liquidity;
•    its geographical dispersion;
•    its continuous operation: 24 hours a day except weekends;
•    the variety of factors that affect exchange rates;
•    the low margins of relative profit compared with other markets of fixed
     income; and
•    the use of leverage to enhance profit and loss margins and with respect to
     account size.