Fx Trading

Fx trading (or Forex trading) is the trading of currencies.  Fx is the short term used for forex and forex stands for Foreign Exchange. Now that we've gotten that out of the way, a simple illustration can be made by thinking of an international traveler. Let's say the traveler is from the U.S and they are going to New Zealand. As a traveler, they recognize that all of the shops they encounter may not accept the U.S dollar as payment. So, they "exchange" some of their dollars for New Zealand currency before leaving the U.S.

That simple story illustrates an important point. Fx trading always involves two currencies. It is the exchange of one currency for another one.   So it always involves two currencies.  In the illustration just made, the traveler would exchange their U.S currency for the New Zealand currency.  Of course, this is a micro story of what happens every day by travelers, banks, and corporations in countries around the world.

The Forex market is the place where currencies are freely exchanged with each other.  These transactions, and the continual change in the value of each country's currency, makes this an exciting opportunity for traders.

Example of chart for Fx Trading:

The value of each country's currency changes over time. Fundamentals such as interest rates, unemployment rates, industrial production, etc. all play a part in the value of each country's currency.  The good news is that all of this is expressed on charts. Even though it involves two currencies, it all shows up on one chart as illustrated above in the chart of EUR/JPY. And, like any financial instrument, these currency charts can be analyzed for patterns just as they are with stocks.

While the value of a country's currency can be seen as relatively stable over a longer term view, there is quite a bit of volatility within a single day. Economic reports and international events can cause sudden spikes and dips and this adds to the risk of currency trading.


If you'd like to see some sample video analysis of the Forex market, then click the following link:  fx trading analysis.


If you are interested in trading Forex, then I highly recommend that you begin by "paper trading". Most Forex brokers will allow you set up accounts that simulate real trading while you learn to analyze the charts and place your trades. There is a learning curve, as with anything else, and beginning traders should not risk real money until they have proven success in their paper accounts.


If you're interested in learning more about trading the Forex market, then you might consider being a member of our membership group:  Forex Pip Starter Pro.