Forex Made Simple

What is forex trading? Why do people trade currency ? Is trading of currency a natural business practice or is it some sort of gambling?

As long as there is supply and demand, and trade happens, market exists.

Forex Made Simple

Forex is the short form for

FOReign EXchange

The Foreign Exchange market (FOREX)

The foreign exchange market (currency, forex, or FX) trades currencies.

With the existance of such market, banks and other institutions can easily buy and sell currencies.

The original purpose of the forex market is to help international trade and investment, as it helps businesses convert one currency to another.

For example, it permits a European business to import Japnese goods and pay Yen, even though the business’s income is in European dollars.

Typically, in a forex market, a party purchases a quantity of one currency by paying a quantity of another currency.

The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

Forex Made Simple as The Trading of Money

Trading on MONEY.

According to Babypips.com (http://www.babypips.com/school/the_skinny_on_forex.html):

“What is FOREX?
The Foreign Exchange market, also referred to as the “FOREX” or “Forex” or “Retail forex” or “FX” or “Spot FX” or just “Spot” is the largest financial market in the world, with a volume of over $2 trillion a day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really is. It actually equates to more than three times the total amount of the stocks and futures markets combined! Forex rocks! ”

The currencies are traded in pairs, e.g. USD/JPY, EUR/USD, GBP/USD, CHF/JPY

The front currency is the base currency and the behind is called counter currency.

Take GBP / USD as an example

1 Pound is the base currency, If today market price is 2.1000

i.e. I GBP will exchange for USD 2.1000

Traditionally, currency trading has been a “professionals only’ market available exclusively to banks & large institutions.

Online forex trading only offer to retail traders in year 2001.

You can learn to trade the forex with many online resources or get yourself a trustworthy and reliable forex mentoring course.

Remember that forex could be one of your multiple streams of passive income in achieving financial freedom, however, there is no such thing as free lunch in the world. For every winner there exist at least one loser on the other side.

Get yourself enough financial education before jumping into any form of investment.

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