Introduction to Forex

Introduction to Forex

 

Forex, also known as foreign exchange, FX or currency trading, is a decentralized global market where all the world’s currencies trade. Essentially, we are talking about the trading of one currency for another and its respective value when changed.

The forex market is the largest, most liquid market in the world with an average daily trading volume exceeding $5 trillion. All the world’s combined stock markets don’t even come close to this. But what does that mean to you? Take a closer look at forex trading and you may find some exciting trading opportunities unavailable with other investments.

 

So how does it work?

 

IT’S ALL IN THE EXCHANGE

 

If you’ve ever travelled overseas, you’ve made a forex transaction. Take a trip to France and you convert your pounds into euros. When you do this, the forex exchange rate between the two currencies based on supply and demand determines how many euros you get for your pounds. And the exchange rate fluctuates continuously. A single pound on Monday could get you 1.19 euros. On Tuesday, 1.20 euros. This tiny change may not seem like a big deal. But think of it on a bigger scale. A large international company may need to pay overseas employees. Imagine what that could do to the bottom line if, like in the example above, simply exchanging one currency for another costs you more depending on when you do it? These few pennies add up quickly. In both cases, you, as a traveller or a business owner may want to hold your money until the forex exchange rate is more favourable.   You might be thinking, well how do I take advantage of the Forex Markets and start making daily profits? The answer? Well, the answer is simple in theory, we buy low and sell high. With such a simple theory why do many fail? Whilst trading is simple in theory, execution is notoriously difficult. In this course I aim to open some key principles and trading tools to help you develop an ‘Edge’ over the markets.