Online Forex Trading is the act of buying and selling one currency against another and profiting from the fluctuations in exchange rates of different countries.
The FX market is the world’s most traded market, with an average turnover of more than US$5.3 trillion per day. Forex trading is essentially buying one currency while selling another. Currency values rise and fall against each other due to important factors such as economic stability and geopolitics. The goal of forex traders is to profit from these changes in the value of one currency against another by actively speculating on which way forex prices are likely to turn in the future.
The currency exchange rate is the rate at which one currency can be exchanged for another. It is always quoted in pairs like the EUR/USD (the Euro and the US Dollar). Exchange rates fluctuate based on economic factors like inflation, industrial production and geopolitical events. These factors will influence whether you buy or sell a currency pair.
Example of a Forex Trade
Let’s say a news story has led you to believe that Sterling Pound will rise against the Australian Dollar.
Investor chooses a broker and opens an account with $500.
Learns and practice using Demo account and other educational tools.
After practicing opened a position of 65K EUR/USD at 1.0850 on 02.01.2016 and closed it on 04.01.2016 at 1.1250.
Profit $2600 Leverage 1: 146.25