Forex is the abbreviation of the words foreign exchange. Forex trading (also commonly known as foreign currency exchange or fx trading) is done in currency pairs. A few examples of currency pairs that are frequently traded are the EUR / USD, GBP / USD, USD / JPY, USD / CHF, EUR / JPY, USD / CHF, and the EUR / GBP. If these abbreviations intimidate you, please do not be. I'll explain it to you in a few seconds.
EUR stands for Euro Dollars, USD refers to the American Dollar, GBP is short for the Great British Pound, JPY stands for to the Japanese Yen, and CHF refers to the Swiss Franc. The EUR / USD is the most traded currency pair in the world. But, my personal favorite is the USD / JPY currency pair.
Trading currency pairs involves buying and / or selling the different treaties in the world. For example, for my favorite USD / JPY currency pair, I could trade US Dollars against the Japanese Yen. If I analyze the trends on the charts, and it shows that the US Dollars has a high probability of going up, I would buy the US Dollars, and then sell it later when it does go up, for a profit. The difference in the prices is called pips. I would use the reverse of that strategy, and sell at a high to buy back later at a lower price, if I find that the charts show that the US Dollar is weakening in comparison to the Japanese Yen.
The foreign exchange market is very volatile and responds instantly to breaking news day and night from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT), and this gives ample trading opportunities throughout the day. It is a very liquid market with very high volume of trades done every single day, so there are no worries about getting stuck with any particular currency.
Forex trading is currently the most powerful financial tool in the world to generate unlimited income. Fx trading is getting more popular around the world each day, as the benefits of fx trading outweighs the risks. The risks of forex trading can be managed too, with the right adequate skill, experience and specialized knowledge.
Get an experienced professional forex trader as your personal coach to help guide you through the potential pitfalls of trading, or attend a forex course that can give you that specialized knowledge on currency trading that you need to accelerate your learning curve, and potentially save you a lot of money in trading losses.
Source by Jolene Lim
