A Short And Sweet Explanation Of Forex Trading

With the current economic conditions, a lot of people are looking for alternative ways to make money. If you are reading this article you probably thought about trading on the foreign exchange market. The commonly used, acronyms for the foreign exchange market is FOREX or FX. 


The simplest foreign currency exchange transaction; is when you travel outside the country in which you live. For example, you go to a bank or currency exchange bureau to convert your “home currency” into the currency in which you are visiting.  If a business conducts transaction outside their home currency they must enter into a FX transaction.


The FX trading that everyone is talking about is a relatively new profitable activity.  With the internet and FX automated software applications; more and more people are getting involved. Trading on the forex market, allows people to brake free from the corporate world and start working from home. You don’t have to give up your day job to be a forex trader. The FOREX market is open 5 days a week and 24 hours a day. The FX has long  forex trading hours: 24 hours a day except on weekends. The forex market hours are 22:00 Coordinated Universal Time  UTC on Sunday until 22:00 UTC Friday. This is a great benefit for the FX trader. You can make your trades after, before or inbetween your daily obligations.


For many years, Forex trading was solely for major banks, large financial institutions and countries central banks; for example the U.S. Federal Reserve Bank. The Internet has opened up forex trading to everyone willing to learn how to trade on the forex market. There are many techniques in forex trading, all with the intention of making substantial profits. The institutions mentioned above have annually and consistently make high profits from trading in the Foreign Exchange market.


The forex market has 7 major currencies and always trade in pairs and usually against the US dollar. There are 7 major currencies which are; EURO (EUR), The British Pound (CGP), Swiss Franc (CHF), Japanese yen (JPY) Australian Dollar (AUS), New Zealnad Dollar (NZD) and the Canadian  dollar (CAD).  You can enter these pairs into a currency calculator. These currencies have the greatest popularity in world’s commerce transactions, the highest activity and are the backbone of the Forex market.


Forex transactions are always traded in forex pairs. Here are some simple FX transaction examples:


EUR/USD last trade 1.5000 – Explanation, One Euro is worth $1.50 to one US dollar.

The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.


Now lets say you had $1000 US dollars and you bought Euros when the exchange rate was 1.50 Euros to the dollar. You would then have 1500 Euros. If the value of Euros against the US dollar increased, then you would exchange or sell your Euros for dollars and have more dollars than you started with. 



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