What is foreign exchange trading? What is forex? These two questions are fucosed on the same concept: Forex.
What is foreign exchange trading?
For instance, foreign exchange means forex, which is the global trading market for currencies. In this market, it’s possible to trade in many currencies pairs. For example the most common ones are:
All of those symbols represent the currency of a Country. USD is the American dollar, EUR is the Euro, GBP the British Pound, CAD the Canadian Dollar, AUD the Australian Dollar and NZD the New Zealand Dollar.
When a currency is compared to another, their value is called exchange rate.
Who has traveled in different Countries knows how the exchange rate can change very rapidly in a short time; it can grow up or fall down depending on the many different factors.
To mention some we have the national unemployment rate, political elections, international agreements, the national consumers’ rate, etc.
The main participants to this market are banks, financial institutes, companies, and small private traders.
This means that everybody can trade in this market and it doesn’t require a big amount of money. What you need are just a good trading platform and a good trading strategy.
a- What is a trading platform?
A forex trading platform is an online platform where it’s possible to trade forex. All those platforms are owned by different brokers. There are a lot of them, the only important thing it’s to choose a trustable and regulated one. To know more about this topic please read our trading platform page here.
b- What is the foreign exchange trading strategy?
A forex trading strategy is a way a trader invest in the market. There are many strategies available for every type of trader. To learn more about this topic please read our forex trading strategy page.
Now going back to the main question ‘what is foreign exchange trading’: when a trader invests in this market has the opportunity to earn some money by deciding if the exchange rate of a currencies pair will grow up or fall down. If the prediction is correct, either the trader decided to sell or buy the asset, he will make a profit.
‘Trading in this market means deciding if the currencies pair price will go up or down and because of that decision, proceeding to buy or to sell it.’