Forex is simply a short way to say foreign exchange trading. This type of trading consists of trading different currencies of the world. The forex trading market is the largest market in the world. Trades can amount to more than 1.5 trillion every day. If you are thinking about getting into forex trading, you had better study everything that you can before you get started trading on the foreign exchange market.
The main places for trading are London, Frankfurt, New York, Sydney and Tokyo. The great thing about forex trading is that it traded online and it can give unlimited, unique opportunities for a trader to react to breaking news around the globe that may affect the markets.
This type of trading uses a sophisticated forex trading software that is used globally. You simultaneously buy and sell a combination of two currencies. The most common traded currency combinations are the EUR, which stands for Euro, with the USD, which is the US dollar. The USD with JPY, or Japanese Yen. The USD with CHF, or Swiss Franc. Or finally the USD with GBD, or British Pound. The forex trading market is so huge that there are unlimited trading opportunities no matter if a currency is strengthening or weakening in relations to another currency.
There is also something called a spot market in forex trading. This means that trades are settled immediately or in reality two banking days. You are unrestricted in the forex trading market which gives you unlimited trading opportunities day or night. Forward trading can be done to swap your trade forward to a later date. You can then settle your account at a later date.
If you hear the term trading on margin, this means that you are buying or selling assets that have more value than what you actually have in your account. This is a lot like gambling and if you don't know exactly what you are doing here, you could suffer a huge loss.
The spread is the difference between the price that you can sell certain currency for and the price that you can buy certain currency. Then when you compare the bid price and the ask price of a currency, the result is quoted in pips. The definition of a pip is the smallest unit by which a cross price quote can change.
This is just the tip of the iceberg when it comes to learning forex trading. There are many web sites devoted to teaching forex trading and some will even let you practice trading before you do it for real. The most important thing to remember is to learn all that you can about forex trading before you invest your life savings. There is money to be made in the foreign exchange market, but you must know what you are doing.
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