Forex Trading Basics
Forex (short for Foreign Exchange) trading is entirely based on simultaneously buying one currency and selling another, always with one of the quoted currencies acting as a base currency and the other one as a quote currency. For example, buying EUR/USD means buying the base currency, in this case EUR, and selling the quote currency - USD.Value of each currency varies depending on market supply/demand at a given moment , which reflects expectations regarding economic trends within currency's domicile country compared to the other countries' economies. In other words, the exchange rate of one currency versus the other currencies is a reflection of the condition of that country's economy. Although currencies in Forex are not limited, the most traded ones are: EUR, USD, CHF, GBP and JPY. If we expected the base currency in a pair to appreciate (go up) relative to the quote currency, We would buy it, thus taking long position in base currency and short position in quote currency. Likewise, if we expected base currency to depreciate (go down) relative to quote currency, we would then sell the base currency for quote currency and our positions would be reversed. The entire Forex market operates round the clock and is organized and run as an OTC (Over-the-Counter) market – electronically, without a real physical location anywhere in the world. Currencies are traded through brokers and dealers acting on behalf of banks, institutional investors and other financial insitutions and companies. Forex was inicially intended for the big players such as banks and large financial institutions, but the rise of the Internet has enabled companies to offer us small players so called „retail“ trading accounts to participate in this incredibly challenging and fast-growing market. You can now trade from the comfort of your home and all you need is a computer with a high-speed internet connection and online education. The following website www.babypips.com contains all you need to know about Forex with step-by-step courses, from beginner to advanced user, including links to companies for free software download with trial accounts and manuals. After finishing with all the courses and succesfully trading on your practice account for a while, you have a chance to get started on a retail trading account with one of the companies and enter a real world of Forex.