What You Should Know About Forex Trading: What It is and What It is Not

foreign exchange forex trading 101Yes, you can trade money to make more money. With forex trading, you could participate in the biggest, most active market in the world. But before that, learn what forex trading is and what it is not:

Forex trading
Forex (sometimes FX) stands for foreign exchange. It refers to the trade that involves the currencies of different countries in the world. It is so big that on a daily basis, money amounting to over US$1 trillion is traded.

Forex trading is not limited by geography or office hours because it is a market that runs 24 hours, beginning Sundays and ending on Fridays. The exchange involves the buying and selling of at least one currency pair. Although traders can choose the currencies they want to trade, they generally stay with the major pairs.

Forex trading also offers higher leverage than the stock market. It has superior liquidity, which means there’s always someone somewhere you can trade with.

What forex trading is not
Forex trading is not personal trading. If you want to participate, you don’t need to go find an office or building to do business. There is no central exchange involved. Instead, there is what is called the interbank market. This lets anyone trade using just networks (such as computers and the Internet) and telephone.

Forex trading is not easy money. You need to learn and understand how it works in order to deal effectively. Forex trading is also not a zero-risk investment. At any time, you could win big or lose big, depending on how the market goes.

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  • Forex trading is not for beginners. It is very difficult and very easy to lose all your money. It’s best to practice with a game account for at least a year.

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  • Jon

    Forex is not as easy as some would like you to believe. As in any market, if you master the skills, you could be on your way to a successful career trading for yourself. However it takes time to learn. Some courses will speed things up for you, but there’s no such thing as a holy grail. Always make sure you do backtesting on any methods you plan on trading with and then forward trade using a demo account. Don’t rush in, the market will always be there, and you’ll be rewarded one day if you do the work.

  • Adam Jonason

    It is true that Forex is more difficult than people make it seem. The best way to become a successful trader is through education and practice. Also, you may a platform that works to your benefit with low spreads and quick execution. I work with metatrader and love it. I have made much more than I first thought I would. Thanks, Adam.

  • Hi Mello, Thanks for this post. I was thinking of trying Forex, but I didn’t know what it was all about. I probably saved some time by reading this. Don’t think Forex is for me at this time. Fred

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  • Nice, I was just going to start learning about Forex.

    Thanks,
    Locke.

  • Forex trading is one of the best ways to generate wealth because you can use leverage to effectively trade with a lot more money than you have in your account.

    However, for this same reason you can also lose money very quickly which is why you need to learn as much as you can about forex trading before you start trading for real.

  • I think forex is a game that requires a strong education to succeed. To many people jump in, make a quick win, but end up losing in the long run because they really have no foundation.

    It is an excellent way to make money, if you’re building a foundation for yourself.

  • What are the costs of Forex trading, any commissions you have to pay? And taxes?

  • Jason Rush

    Great 4rum!
    Did u c what i ran into? It’s a comparison at:
    forexfinder.net

  • I think the key to the whole post is the last paragraph:

    “Forex trading is not easy money. You need to learn and understand how it works in order to deal effectively. Forex trading is also not a zero-risk investment. At any time, you could win big or lose big, depending on how the market goes.”

    What I’ve found that works best for me is taking very calculated risks and using Forex as a supplementary investment. It’s much more active and fun than other trading in my opinion, and can also have pretty solid, steady growth if you do it right. The people who claim huge claims also post even bigger losses 99 times out of 100. But with a solid system, you can make it a profitable venture. I do personalized training as well as daily videos with trades you should and shouldn’t make on the day. Check it out at:

    http://forex-trading-coaches.com

    You can do great in the Forex market!

  • Forex trading can be a challenging task to do without proper knowledge and experience. It’s always better to test drive your system in a demo account/paper trade before going live.

    All the Best! :)

  • I agree with Randy.. but beginners can always take any forex courses if in doubt.. just search around

  • Forex trading is only risky for those who do not find the time and effort to learn the trade. If you really put in some effort to learn, you will find that it is a very safe investment especially when you are trading yourself.

    Do not think that you can trade forex without any training. Always learn before you trade.