The Foreign Exchange market is based on the simultaneous buying of one currency and the selling of another. This means that now a trend either up or down can be traded simply by interpreting which currency will continue to be weaker or stronger relative to the other. Currencies are available for trade 24 hours a day, 5 days a week. Being that the currency market is the largest market in world, with daily volume of over $1.4 trillion being bought and sold, the liquidity and time availability of trading makes it one of the most potentially lucrative markets available to anyone.
When you trade in currencies you are trading in currency pairs (one currency relative to another), thus when you buy a currency pair you are long the currency listed in the pair, and thus expect it to appreciate. If you sell the currency pair you are short, and expect the first currency listed to depreciate relative to the second. Since these markets trade 24 hours a day, profits/losses will fluctuate as the currencies values are always moving. Examples of currency pairs include the EUR/USD, USD/JPY and USD/CAD.
All markets have two prices at a given time. These prices are the bid and ask, which reflect the price buyers are willing to buy at and sell at respectively. When trading through a Forex broker if you want to buy you will need to purchase at the ask price, and if you want to sell you will need to do so at the bid price. The difference between the bid and ask is called the spread - this is the cost of your trade. Since Forex brokers do not charge commissions, this is how they make their money. For the trader it is imperative to find a broker that offers small spreads, as over time, larger spreads will significantly eat into profits. ForexYard mentioned above offers tight spreads.
