Aspiring forex traders all over the world know how powerful it can be to unlock the mysteries of trading foreign exchange. But with so many intricate details to master and strategies to adopt, where does one start?

WHAT IS IT?

Forex trading is the buying and selling of currency, with the aim of making a profit. Currency trading happens continuously around the world and involves speculating on the price movements between two currencies.

WHAT ARE CURRENCY PAIRS?

Currency pairs are the two different currencies traded. For example, the currency pair EUR/USD means Euro to US dollar. Euro is the base currency and USD is the quote.

If you see EUR/USD 1.075 – this means that one Euro is worth 1.075 US Dollars.

By trading in currency pairs, traders can speculate on the changing exchange rates of two different countries currency and benefit from changes in the value of one currency against the other.

Many traders make use of advanced strategies such as automated software that does the trading for them and can take advantage of news or events that affect the currency markets.

WHAT ARE THE RISKS?

Although there are big potential gains with Forex trading, it is important to remember the risks involved. Exchange rates are very volatile, and you could stand to lose your entire investment and more if you are leveraged. The margin of Forex trading can be highly leveraged, which increases both potential losses and profits.

WHAT IS LEVERAGING?

Leveraging is an attempted to maximize your returns by amplifying your position size with borrowed funds; but it should also be used with caution since the potential for losses is increased with the amount of leverage used.

HOW DO I START FOREX TRADING?

Trading forex is not for beginners. The best way to begin to understand how fast moving the forex market can be is to open a forex trading account with a broker and start a demo account. This way there is no risk of losing real money (or gaining), but you will experience first hand how the market moves.

What currency pairs are you most interested in?