Forex Trading: Simple Guide for Beginners

What is Forex Trading (for Beginners)

Forex Trading is the thing of trading currencies from different countries against each-other. Forex is an acronym of Foreign Exchange. For example, In Europe the currency is known as the Euro (EUR) and in United States the currency is known as the US Dollar (USD). An example of the forex trade is to buy Euro while simultaneously selling the US Dollar. This is called the going long on EUR/USD.

How Does ‘Forex Trading’ Work?

Forex trading is typically done through the broker or market maker. Being a forex trader you can also choose the currency pair that you expect to change in the value and place the trade accordingly. For example, if I had purchased 1000 Euros in January of 2006, it would have cost me around $1200 USD. Through-out 2006 the Euro’s value vs the U.S. Dollar’s value increased. At end of the year, 1000 Euros was worth $1300 U.S. Dollars. If we had chosen to end our trade at that condition, we would have a $100 profit.

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Forex trades can also be placed through the broker or market maker. Orders can placed with just the few clicks and a broker then passes order along to the partner in Interbank Market to fill your’s position. When we close our trade, broker closes the position on Interbank Market and credits our account with loss or gain. This can all happen literally with-in a few seconds.

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