The Simplest Introduction to Forex Trading Ever

Friday, December 21, 2007
Plenty of Forex Articles have been written which aim to Introduce Forex Trading to a complete newbie/beginner. Even we have a few basic forex articles aiming to target that particular audience.

But looking back on them I thought, they were a little to complex for my liking. Since I have started the Beginner section I am writing this Introduction keeping that in mind.

So here goes the Simplest Introduction to Forex/Forex Trading/Currency Trading/Day Trading

Forex is the most fluid and largest Financial market in the world!
Forex literally stands for Foreign Exchange. And thats what it does-- Exchange Foreign Currencies.

Now why exchange Foreign Currencies?

Well, For Profit of course! Forex Trading is the business of buying and selling Currencies.

So basically, we look to buy currencies when they are of low cost hoping to sell them and making a profit when they become costlier.

Traditionally, Forex Trading( FX/day trading/currency trading/Foreign exchange/currency Exchange refer to one and the same) was reserved for Banks and advanced Investors.

But, Today nearly a person in every family in the United states is involved in Forex Trading.

Which brings us to another question. Why Forex? Why to invest in Forex instead of the huge number of other business/investment opportunities.

To answer this particular question, you must read this article of mine -- Why Trade Forex?

Now, moving ahead-- Why the sudden boom in Forex Trading.

This has been a direct result of advent of PC and the Internet which has brought the largest financial market online.

The Currencies are always traded in pairs. Most of the Forex Market is depended on the Four major currency pairs EUR/USD, USD/JPY, GBP/USD, and USD/CHF.

USD=US dollar
JPY= Japanese Yen
GBP=Great Britain Pound
CHF=Swiss Franc

Each pair will have a particular value at a particular time.

To give a THEORITICAL example

if USD/JPY was equal to 1.00 today. That means that for one US dollar , you could buy one Japanese Yen.

The next day Imagine the Same USD/JPY now equals 1.5 , This means the USD dollar value has increased and now you can buy 1.5 JPY for 1 US dollar.

So, we look to make a profit by buying currencies that we think will have their value incremented in the near future.

Well, This brings us to the end of this Article.

Hope I was clear, If you have any doubts , do leave a comment!
and if you liked it do give a stumble or a digg!