Are you new to forex trading?If so, forex trading may seem "foreign" to you now, but it doesn't have to. Use the information in these pages to help you learn more about the forex markets and how you can trade more confidently in them.
What Is Forex?
Forex (foreign exchange) is the buying and selling of currencies. Forex transactions always include two currencies—one currency is purchased while the other is sold. For example, in a forex transaction euros (EUR) may be purchased while US dollars (USD) are sold; or Great British pounds (GBP) may be purchased while Japanese yen (JPY) are sold. The two currencies involved in a transaction are considered a currency pair (e.g., EUR/USD or GBP/JPY) and each currency pair has an exchange rate.
The goal of forex trading is similar to the goal of stock trading where you attempt to "buy low and sell high." Currency exchange rates fluctuate up and down throughout the day, providing forex traders with the ability to potentially profit from these movements.
The basic concept of forex trading is similar to those used in equities, bonds, futures, and options markets—the distinction being the product that is traded. In fact, most new forex traders will probably find the transition to forex to be simple and straight forward. The technical indicators and strategies used in other markets can be used in the forex market as well.
Why Trade Forex?
■Flexibility: Place trades 24 hours a day (Sunday, 5:15 p.m. ET — Friday, 4 p.m. ET).
■Opportunity: Easily trade when markets are trending up or trending down.
■Simplicity: Use technical analysis (indicators on charts) methods from other markets like equities.
■Strength: Access the most liquid market in the world ($4 Trillion average daily volume).
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