What is Forex Trading?

What is Forex Trading? I’m sure you’ve seen the advertisements on television, claiming that any old Joe can make millions in the stock/bonds/forex market.

As a Forex trader, I take special notice of these advertisements. They all seem to holler about results. They blind the viewer with sparkly earnings figures that Old Joe made in just a week.

Now don’t get me wrong, with time, consistency and persistence, those sparkly results are achievable. But the advertisements (at least the ones I’ve seen) neglect to answer one simple, fundamental question:

What is Forex Trading?

Beyond the hype, what is it? I’ll tell you what it is. Quite simply, Forex is an acronym for Foreign Exchange. It’s where one country’s currency can be bought and sold for another country’s currency.

Due to the fact that each country and currency has its own economic issues, the value of a certain currency will fluctuate, often with a lot of volatility.

Volatility is a good thing, because it means there is a lot of movement in a currency’s price. And where there’s movement, there is the opportunity for the trader to make money.

In Forex, there is an opportunity to make money whether a currency’s value is going up or down.

For example, if you wish to trade the USD against the Euro, and you believe that the USD will most likely decrease in value while the Euro increases, you will enter the market with a bearish approach.

That is to say, if the USD loses value against the Euro, you stand to make money from this. Why? Because you sell your USD currency at the right time – before it loses value.

And how do you figure out when is the right time to sell? I use technical analysis tools and good charting software.

Above all, you need to practice, practice, practice. Nobody is going to pull money out of the market 100% of the time. You will win some and lose some.

But there are many, many people out there who are making a good income from the multi-trillion dollar Forex market, and live a good lifestyle because of it.

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