1. What is Forex?

Forex, FX short for foreign exchange is trading currencies of different countries against each other.

For example, you may buy the euro while simultaneously selling US Dollar. This is a common Forex transaction. There are 2 currencies, so you call it a currency pair. There are many different pairs: EUR/USD, GBP/USD, USD/JPY, etc. The exchange rate is expressed through a quote like EUR/USD = 1.3000.

The currency to the left of the slash is the base currency, while the currency on the right is called the quote or counter currency. The base currency (in this case, EUR) is always equal to one unit, and the quoted currency (in this case, USD) is what that one base unit is equivalent to in the other currency. The quote means that 1 EUR = 1.3000 USD. In other words, 1 euro can buy 1.3000 US dollars.

When you buy/sell one currency against another, it means you open a long/short position on this pair. For example, if you expect the euro to appreciate against US dollar, you open long position on EUR/USD. As some time passes and the price of EUR/USD rises, you close the position and get the profit. The amount of profit depends on how much the rate of this currency pair has increased during this time and the size of your position.

Traders who expect the prices to rise are called bulls, while those who expect a decline are referred to as bears.

2. Who trades at Forex market?

There are many different players at the FX market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services.

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In 2010 daily FX volume reached $4 trillion increasing by 20% from 2007, according to data from the Bank of International Settlements (BIS).

FX market is decentralized. In other words, there is no physical location where investors go to trade currencies. FX traders can use the internet to check the quotes of various currency pairs from different dealers. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers. The main participants of trading are commercial banks, so currency quotes are set at the interbank market. You can obtain access to the interbank market through FX broker (see 5).

3. Why become a Forex trader?

• You can get extremely big return in comparison with you initial deposit.
• You dont need large amount of money. In fact, you can start with only 5 USD.
• You will get a vast knowledge and experience in finance.
• You have your own business and depend only on yourself.
• You are free to manage you time as you wish.

4. When is Forex market open?

FX market is open 24 hours a day, 5 days a week. There are trading sessions which correspond to the time during which stock markets are open in a particular region of the world. Usually trade volume is higher at the intersection of the sessions. FX day always begins in Australia and New Zealand, and then spreads to Asia. After that its the turn of Europe and, finally, the United States and Canada join in.

You can trade anytime you wish during the working week. You can open you currency position for a couple of hours or even less (intraday trading) or for a couple of days (long-term trading) just as you see fit.

Trading sessions (GMT)