If you are wondering what is forex trading, you're definitely not alone! Many people have heard of forex trading and perhaps seen articles or advertisements online but aren't sure what it means. Let's take a close look.
Forex trading refers to foreign exchange trading - the trading of currencies from various countries. People who trade forex will exchange one currency for another in the hopes that the currency that they bought goes up in value in comparison to the one they exchanged it for.
What is Forex trading? You may have heard the phrase or seen various TV programs or websites talking about Forex trading, but just what is it exactly? The Forex market is a market that is operated 5.5 days a week and anyone with a computer and an internet connection anywhere in the world can trade with it. It is a completely different ball game compared to stock trading.
Forex trading is where currencies from various countries are traded against each other. For example across Europe (except the UK) the currency in circulation here is known as the Euro and in the USA the currency in circulation there is known as the US Dollar. If when trading on the Forex you were to buy the Euro at the same time as selling the US dollar then you would be carrying out what is known as going long. The word Forex is actually an acronym for the "Foreign Exchange".
Today there are places online where trades can be made that you place either through a broker or a market maker. To place an order normally requires only a few clicks of a button and once the broker has received it they then pass it on to a partner in the Interbank Market so that your position can be filled. Once you close the trade the broker will then close your position on the Interbank Market and then credits your Forex trading account with any losses or gains you have made. Sometimes such things can occur within just a few seconds.
People who trade currencies will use various techniques to try to determine which currencies are going to go up and which are going to go down. There are certainly many different strategies available, but if you're a beginner wondering what is forex trading you can actually use a forex trading program that will point out trading opportunities for you.
These programs are also called "forex robots" and anaylze the markets by looking at price history, movements and other indicators. They then look for patterns and indicators that have the potential to signal a winning trade.
Why would anyone want to trade the Forex markets over the more traditional stock market? The main reason is that for 5 days a week the Forex market is a 24 hour market. Unlike the stock market, you can open and close your trades in Forex anytime of the day. The market is almost never closed (except on weekends), this allows you to buy and sell whenever you like. The second main reason is because many currency pairs in the Forex market are volatile. This volatility promises large profits if a trader is fortunate enough to be on the right side of the trade.
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