Forex is and acronym that stands for Foreign Exchange Market. Forex trading for beginners: Forex is the most traded worldwide financial market. Trading goes on for 5 days in a row, 24 hours a day. The market opens at 10 am. Australian time, and goes around the world until close at 5pm. Eastern time in New York City. It is decentralized, and trading goes on over the counter, or OTC, in whatever market is open at that time. The foreign currency exchange rate is what it costs to exchange one countrys currency for another countrys currency. Consider going on a vacation to Europe and having to exchange U.S. dollars for Euros while you are there. If $1 U.S. dollar is worth 0.5 Euros, then you would get 2 Euros for every U.S. dollar you exchanged. Then when you are ready to come home to the U.S. you will need to exchange your Euros back into U.S. dollars, but this time value of one Euro has changed to 0.25. That is 4 Euros for $1 U.S. dollar. The value of the Euro has gone down. This is called exchange rate fluctuation. When trading Forex, you speculate the future value of a currency by buying or selling one currency into another.

In online forex trading the U.S. dollar is the central currency in which all currencies are traded. The eight most popular currencies traded are called the majors. They are the U.S. dollar (USD), the Canadian dollar (CAD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the New Zealand dollar (NZD), the Australian dollar (AUD)and the Japanese yen (JPY). Currencies are always traded in pairs, buying one base currency while at the same time selling another counter currency. Cross currency pairs consist of 2 countries currencies traded without the U.S. dollar. A cross currency would be the Great British Pound into the Japanese Yen. A typical Forex price consists of the Bid and the Ask. The difference is called the spread. There are many combinations of currency trades. Most beginners focus on 1 or 2 to start until they get more familiar with all of them. There is always new data and news reports released every day about the currencies. You can easily acess charts, news, and trade from the web or your smart phone.

Currency values move in small increments. Pip stands for percentage in parts. Pips are used to count the small percentage of the currencies fluctuation in the markets. Pips start at the 4th decimal place to the right. The exception is the Japanese Yen, which counts pips 2 places to the right of the decimal point. If the Euro is valued at 1.5755 today and then goes doen to 1.5745 tommorrow then it is called a decrease of 10 pips.

You can trade on a margin with Forex just like stock trading. Although. trading with borrowed money can have more risk if you lose. You could end up owing more than you have. Placing stop loss orders for all your open trades is a good way to limit your risk. Currencies are continually changing and can be volatile. There is a significant level of risk involved with Forex trading. Know your risks and plan accordingly. Dont rush in, patience and preparation are a forex traders friend. Wait for a clear buy signal to develop before placing your trade.

A good place to get started is to read the U.S. National Futures Association publication, Trading Forex, What Investors need to know. Easy Forex Trading.