What is Forex Trading and to trade with Forex ?

The Foreign exchange market or Forex or FX is a place where currencies are exchanged. The foreign exchange trading involves trading of currencies in all aspects – including buying, selling and exchange of currencies according to the current market price or a fixed price.

Currency: Base for trading
This medium of exchange (currency) is extremely important to carry out a trade or even basic financial transactions when you deal with another country. For example, you are on a trip to a foreign location; you have to use the currency which is valid in that part of the world. Every country has its own legal currency. To be able to visit tourist locations or buy simple things from New York, it becomes mandatory to convert the Indian Rupees into US Dollars for the efficient transaction. Suppose I want to buy milk in the US. I need to pay the amount in American Dollars as Indian Rupees will not be accepted here.

What is Forex?
The foreign exchange trading is the largest market in the world and functions round the clock. When you visit the airport, you might have noticed a signboard stating Foreign Currency Exchanged/Sold here. At this place, the currency gets exchanged according to the current conversion rate. Now What is Forex trading and what the Forex market does is to set the currency value of one country against another based on current scenarios.
Forex is the most liquid financial market and operates for 24 hours a day, 7 days a week in every time zone. Now the fascinating thing about this market is there are no typical buildings to perform this foreign exchange trading. All the transactions are done in an electronic manner.

Trade basics in Forex?
It can be done from your workplace or home on your own. The first requirement is to open an account with the Forex broker. Trading is much more than just exchanging currency. Foreign exchange currency and foreign exchange trading are drastically different things. The highest traded currencies in the global market are the US Dollar and the Euro.

You can start by grasping and learning some basic knowledge that will help you in the long run. Hence the foremost steps include understanding the prerequisites of the foreign exchange trading market. You need to be familiar with terms like the base currency, quote currency, exchange rate, long position, short position, bid price, ask price, spread. So let’s get started with some basic definitions

• Base currency: Currency you spend.
• Quote currency: Currency you purchase.
• Exchange rate: How much you have to spend in quote currency to purchase base currency.
• Long position: This deals with buying base currency and selling quote currency.
• Short position: This is you buy quote currency and sell base currency.
• Bid price: Price at which broker buys your base currency.
• Ask price: Price at which broker sells you base currency.
• Spread: Difference between the Bid price and Ask price.

How to trade in Forex:
Now to do Forex trading you come across broker. Broker plays a small role in the foreign exchange market. The volume of the foreign exchange trading being huge and the market being continuously on, currency traders’ use brokers to access the Forex market.

Now once you become are the basic requirements and have made up your mind on which currency you are going to trade, you should be a pro to do some calculations and get huge profits. The profits in Foreign exchange market are measured in pip. Pip denotes the change in value between the cash exchange.

Now, wait!! Before you take the next step how to trade?? Rather how to start trading and earn some bucks? What you need to do is Google out the different brokerages. Research always provides you some insights. Data mining and extracting knowledge for a field you are new and keen to venture into is always a good idea. When trying to contact some broker, look for someone who has been in this field for quite some time and has more than a decade experience. Experience is the best teacher. The Forex broker must be aware of the company policies and how it functions, must be honest and transparent and give proper government insights. While selecting a broker for you, specifically when you are in the how to trade phase it’s always good to review the broker’s products and his business reach and get accustomed to his client’s database. Check for reviews and customer feedback to find out if the broker supports ease of transactions.

With this information in foreign exchange trading, you are ready to go! Once you have opened your Online Forex Brokerage Account, fill out the details and do appropriate paperwork. To start trading in this market, your broker will send a link. Clicking on that link will activate your account. You can now start trading.

Again trade can be carried out by individuals, corporate or institutions in 3 different ways – Spot market – has the largest trade quantum as other two are depended on this, deals with the real asset. Forward market –was favored by individual investors owing to the availability of longer period and Future market. The demand and supply equation is dependent upon many factors like political situations, rates of interest, economic performance and having a fair idea of how the currency will perform in future.

Before you start to begin Forex trading get an overview of the market and apply different methods to get a clear idea. You can analyze the market by performing the following analysis procedures:
 Technical analysis - Review charts and historical data from the broker.
 Fundamental analysis – Looking at the economics of the country.
 Sentimental analysis – Guessing the mood of the market.

Now based on the broker’s policies determine your profit margin. Little investments can lead to big trades. Since all the processing happens on your account, it’s generally advisable to invest 2 percent of your cash in the currency pair.
Forex trading allows you to place different orders in the market and earn some revenues and trade in the international market. Worth a try! Hurry up!