Forex stands for foreign exchange and is usually associated with trading currencies. It is the biggest international trading market. Trading in the forex market has the same basic principles as trading a stock market. In order to succeed, you must buy low and sell high. With this basic concept, every day, millions of people make and lose money. Banks, commercial companies and individuals can all buy and sell in the forex market
It has become an increasingly popular market due to the ease of getting started and the potiential for overnight wealth. Many websites exist that sell you information on how to buy and sell properly in the forex market, but I do not recommend paying for what you can get for free.
Forex uses three letter codes to identify each currency. For example, US currency is USD. The Japanese currency is JPY. To better understand the relationship between the two currencies, I will use another example. If the USD to then JPY rate was 1:100 then that means that 1 USD will get you 100 JPY. This means that if the JPY goes up to 101, then you earn a 1% increase.
The great thing about forex is that the market is always open during the work week. It is running from 7am (New Zealand time) on Monday until 5pm on Friday(NY time).
Currencies tend to follow predictable trends. These trends are usually repeated, allowing you to make money by making the same investments daily. Many brokers also do not charge you commission to trade or open up a mini account. (account trading small amounts, usually around $100 to $500)
This article was created to provide a basic intro to forex. I would recommend opening up a free practice forex account to get used to trading before you invest any real money.
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