In order to trade successfully you need to understand what a pip is and how to calculate its value.
“In this short video we will introduce you to one of the most exciting and dynamic markets in the world and explain how trading forex works.”
Forex, FX or currency trading, as it is also known, is the buying and selling of currencies. If you have travelled you have probably already made a foreign exchange trade when you bought the currency of the country that you were visiting. For example, you may have sold euros to buy dollars for a trip to the USA.
The difference with the online forex market is that you don’t purchase or sell actual, physical currency. The buyers and sellers in the forex market can be a bank, a business or an individual investor like yourself.
You buy or sell currencies, which are traded in pairs, with the goal of trying to profit from appreciation or depreciation of one currency against the other. When you decide to buy or sell you are speculating on of the future value of the currencies.
Take for example the EUR/USD pair. You choose to buy the euro and sell the dollar. Let’s assume that due to market fluctuation the value of the euro increases against the dollar.
You then decide to close your deal and sell the euro. The difference increase in the euro rate means a profit for your deal.
With forex you can choose to trade anywhere anytime by accessing your trading account via the internet which means you can trade from your home, office or even your mobile phone. Such is the nature of the market you can choose to enter and exit trades 24 hours a day, five days a week, starting after 6am Sydney time on Monday, crossing the major financial markets, and ending at 5 pm on Friday in New York
With this level of accessibility the forex market constitutes one of the largest trading markets in the world with a daily turnover or volume of almost USD 4 trillion. This makes it interesting for traders since high volumes lead to liquidity and liquidity equals tradability.
Trading forex is risky, which is why we encourage you to grow your knowledge. Why not view more of our videos, download our ebook, sign up to our free events and practice trading with a demo account?