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What is Forex Trading

What is Forex trading?

Forex also referred to as FX, foreign exchange, and currency trading is the act of exchanging one currency for another.

Why Trade Forex?

There are many reasons why currencies are exchanged. Whilst most foreign exchanges occur for practical reasons such as tourism and commerce, trading also takes place with the aim of making profits from the changes in exchange rates.

If you have ever been abroad and needed to purchase the currency of the country you were visiting, or if you have ever purchased goods or services online in a different currency from your bank account, you have participated in trading Forex.

Whilst being one of the world’s largest financial markets, there is no central marketplace. Trading occurs electronically, over-the-counter (OTC) 24 hours a day 5 days a week with prices being quoted from midnight server time on Monday (00:00) until midnight on Friday (24:00).

How to Trade Forex?

Traded in a pair, investors speculate on the rise or fall in the currencies’ value. Buying one currency in the pair whilst simultaneously selling its counterpart.

Take the EURUSD as an example:

If the value of the EUR rises against the USD, this will in turn decrease the value of the USD as it will now cost more USD to buy EUR. To take advantage of such situations, investors could buy the EUR against the USD and would profit if the EUR continued to rise in value.

If on the other hand, the EUR were to fall in value against the USD, investors could sell the EUR against the USD and would profit if the EUR continued to decline in value.

Who can trade Forex?

Anyone can participate in Forex Trading from anywhere in the world, provided they have adequate capital, a good internet connection, and access to a trading platform.

Here at TradersTrust, we are committed to providing you with some of the best available tools and trading conditions helping you to focus on what is most important.

If you are new to Forex trading and want to learn more, you can check out our educational articles here and open a Demo account here