Forex is money denominated in the currency of another nation or group of nations. Market consists of all buyers and sellers willing to engage in exchange relationships. Exchange rate is the price of a currency. International business is transacted in forex. It is one of the hottest topics around these days. But what exactly is it, and how can the average person make good money in Forex?
Forex (foreign exchange) also called "FX". It doesn’t get the big press like stocks, options, and commodities. But the forex is the biggest market in the world and it offers investors an incredible opportunity for profit. In this we trade in currency, not in stocks and bonds.
Simply, Forex trading is just the buying of one currency and the selling of another. As exchange rates go up and down, you either make gain or lose money.
For example, let's say you are analyzing the US Dollar and the Japanese Yen. Your research seems to indicate that the US dollar is undervalued and is due for a rise in price, and at the same time you expect the Japanese Yen to lose value. In this case you would execute a trade to buy US dollars and sell Japanese yen. If you are correct and the exchange rate rises, you make a profit!
you do not have to limit yourself to only one pair of currencies. There are dozens of different currencies to choose from. But if you are just starting out, I suggest sticking to the seven major currencies:
USD - US Dollar
EUR - the Euro
GBP - British Pound
JPY - Japanese Yen
CHF - Swiss Franc
AUD - Australian Dollar
CAD - Canadian Dollar
Most small investors concentrate their trading on just these seven currencies.
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