What is Forex Trading and How Can It Make You Money

By Rex Fitzpatrick

What is the Forex market? To put it simply, it is a non-stop cash market in which the currencies of different countries are traded for profit. The goal of the investor is to profit from the movements within foreign currencies such as the Euro, U.S. Dollar (USD), Japanese yen, Australian dollar (AUD), etc. Forex trading is always executed in currency pairs and so as movement happens one side gains value and the other loses value.

Foreign currencies are simultaneously and constantly bought and sold not only across local markets but global markets as well. The foreign exchange market is able to change at any time when it responds to real-time events.

The main allurement of currency dealing that private investors have and the attractions for short-term trading in the Forex market are the following:

" 24-hour trading that is available five days a week where a trader has non-stop access to dealers and automated systems in the global Forex market

" The liquidity of an enormous market that makes it simple to trade most currencies.

" Standard instruments in order to control risk exposure.

" Volatile markets that offer profit opportunities.

" Ability to profit in not only rising but falling markets as well.

" There is leveraged trading that has low margin requirements.

" There are many options available for zero commission trading.

As you can see, the Forex market offers tremendous opportunity for profit if you know how to play the game. First you must get a basic knowledge of how to trade in the Forex market. There are some really good resources for this. Get one that is written or taught by actual traders. This is important because this market is mastered by those who trade and not those who just study it.

Second, learn to take all emotions out of your Forex trading system. This is like a business. You always need a trading plan and you must apply it without fail to every trade. This means that when a trade has gone the other way, there is a set level where that trade should get closed out to minimize your losses.

At the same time, when your trades are winning, make sure you let the winners ride to a set point you have defined in your trading system. The goal is to have more winners than losers and for your winners to create extraordinary returns while your losers generate only small losses.