What is Forex Trading All About and How does it work? Completed Explanation
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Thread: What is Forex Trading All About and How does it work? Completed Explanation

  1. #1

    Post What is Forex Trading All About and How does it work? Completed Explanation

    What is Forex Trading - Quite simply, it’s the international market that allows the exchange of one foreign money for another.

    If you’ve ever traveled to some other country, you normally had to locate a foreign money exchange booth at the airport, and then exchange the cash you have in your pockets into the currency of the country you are visiting.


    You go up to the counter and notice a display screen displaying different exchange prices for different currencies.


    You find “Japanese yen” and assume to yourself, “WOW! My one dollar is really worth 100 yen?! And I have ten dollars! I’m going to be rich!!!”


    When you do this, you’ve actually participated in the forex market! You’ve exchanged one foreign money for another. Or in forex buying and selling terms, assuming you’re an American travelling in Japan, you’ve sold dollars and bought yen.


    Before you fly returned home, you stop by the currency exchange sales space to trade the yen that you miraculously have left over and notice the exchange prices have changed.


    It’s these adjustments in the exchanges prices that allow you to make profit in the foreign exchange market.


    The foreign exchange market, which is normally recognised as “forex” or “FX,” is the biggest financial market in the world.

  2. #2
    When trading in the foreign exchange (forex) market, it's difficult to underestimate the significance of pips. A pip, which represents either "rate in point" or "price interest point," represents the fundamental development a currency pair can make in the market. For most currency pairs—including, for instance, the British pound/U.S. dollar (GBP/USD)— a pip is equivalent to 1/100 of a rate point, or one premise point, and pips are included in the fourth spot after the decimal in price quotes.

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