Understanding Forex Trading For Beginners By Natalie Schorr
What is Forex Trading? Perhaps you've heard of it somewhere in passing, but really never given Forex Trading much thought. I wanted to write a brief guide here to explain it in easy to understand terms.
Forex is short for "Foreign exchange," and simply means the online trading of foreign currencies. All currencies around the world are assigned a three letter code, such as USD for United States Dollars, EUR for the Euro, or GBP for the British Pound. Trading is done in combinations called a "cross."
A cross is formed by combining the codes for the two currencies you are working with, forming a 6 letter combo such as GBPUSA. When doing a combo, the more expensive currency is listed first. The four most common currency pairs that dominate the Forex Market are:
Euro vs US Dollar USD vs Swiss Franc USD vs British Pound USD vs Japanese Yen
After the cross, you will see a number. For example, if you saw GBPUSD=1.529, what that means is that it takes 1.529 US dollars to equal 1 British pound. When a rate changes, it is displayed in bold print, so a change from 1.529 to 1.531 would equal a move of 3 points.
The goal, in very simplistic terms, is to invest in a currency that appreciates in value in relation to the other currencies, AKA buy low - sell high.
Unlike the stock market, Forex currency trading runs 24 hours a day. Since every country around the globe trades on the market, it's always business hours somewhere. So if you are just researching Forex, you can do it in your spare time to get a feel for the real time trading without having to quit your day job.
There are online Forex brokers, just as there are online stock brokers. In the past, only large financial institutions could trade on the Forex Market, but now with the advances of technology, even individual investors can profit with online currencies trading.
The important thing with any investing is to do your homework. Take time to watch and understand the markets before jumping in.
Natalie Schorr writes on a variety of products and services on her blog, http://consumerhumor.blogspot.com