The short definition of Forex currency trading is the simultaneous selling of one currency and the buying of another. So yes, if, let`s say, you exchanged dollars for euros, during a trip to Spain, you have done your first step into the Forex world.
When you got at the bank, you probably noticed a screen displaying different exchange rates for a big list of different currencies. If you exchanged dollars against the euro, you noticed that the value of the dollar is lower than the value of the euro, so if, for example you sold 100 dollars, you bought only 76 euros.
In this case, you lost some money, but if at the and of your trip euro decreased its value from 1.32 USD to 1.30 USD, you earned some profit and you got home richer.
This is how Forex works, too. A trader exchanges one currency for another, because he predicts that by the time when he will sell that currency, its value will increase and he will earn a big profit.
Basics
Forex is one of the hottest trading markets in the world today. Derived from the words "Foreign" and "Exchange", Forex is the practice of currency trading.
Back to the example above about your trip to Spain, it is true that by exchanging money you participated somehow to the Forex currency trading market, but, in reality, Forex is a little bit more than just exchanging money.
The Forex market is different though, by actively engaging in online trading using broker platforms you can buy and sell currencies for huge profits. This is because you trade with a leverage so that even a small amount of money can quickly become a huge amount if you make the right trade.
Let`s see, in simple words, how trading works
You have an amount of money and you think that it can bring you some more money by using Forex. So, you decide to sell that money and buy a different currency. For example, you exchange 100 euros against 100 dollars, because, after studying the market you think that the U.S. dollar is gonna increase its value in a few days. So, if your predictions are correct, a few days later the U.S. dollar does increase its value and now you sell the 100 USD at a higher price. And, of, you get profit.
Learning - the key of successful trading
You see, being a trader in the Forex currency trading market is like managing a business or building a skyscraper. It takes time, courage and strategy. So, before throwing yourself into the real business, you should take some time to familiarize yourself with it and have the certainty that you do understand how does it work.
Here you can find some cool advices about how to become a successful trader. It is important that you find a place which is designed to educate you on what Forex is all about and the main principles of trading.
Sometimes, the education process can be the hardest part of the Forex currency trading market, so that`s why we decided to make it easier and funnier for you!
