Forex or foreign exchange trading is the buying and selling of international currencies like US Dollar, Japanese Yen, Euro and Swiss Franc for profit. The forex market is the largest of its kind in the world with a daily turnover of approximately $3-$4 trillion. This market operates twenty-four hours a day for five days a week except on weekends and trading can be carried out from all parts of the world.
The key to making a sizeable profit in forex trading is to buy low and sell high. A successful trader is one who will be able to determine the market trend for a particular currency and trade accordingly. In foreign exchange, all the currencies are denoted using a three letter code. An example of this would be USD which stands for US Dollar and EUR for Euro.
Forex trading is carried out in currency combinations referred to as a cross which is denoted using a six letter word with the currency which is more expensive written first. This can be represented by the example GBPUSD which means a combination of Great Britain Pound and US Dollar. In forex trading, the rate of the currency is represented as a five digit number; for example GBPUSD = 1.8765 denotes that 1 British Pound equals 1.8765 US Dollars. When there is a shift in the rates, it will be represented accordingly; this shift is what a forex trader should recognize to make a deal and gain profit.
In foreign exchange market, the price quoted by a seller is known as the ‘ASK’ price and that quoted by a buyer is known as ‘BID’. It is possible to purchase currency from a seller who quotes an asking price the same as your bid price. These are the key information a novice to the forex trade should master before beginning to carry out the trade and fetch high profits.
My name's Jim (James) Phillips, I live in sunny Australia, and started trading while in university as a hobby. I quit uni to take up trading full time because I was having so much fun, and making enough money to live off at the time.