What is Forex Trading?
What is Forex?
Forex is the conversion of money from one currency to another. The word Forex is an acronym derived from the words Foreign Exchange. It’s also called fx, which is an abbreviation of the word forex.
Different countries worldwide use different sets of currency. America uses the US dollar while Japan uses the Japanese Yen. If an American wants to fly to Japan for business or leisure, they may visit a currency exchange bureau to have their US dollars exchanged for Japanese Yen. Similarly, if you were to import a car from Europe to your country, you’d participate in the global foreign exchange market since at one point during the transaction, an exchange of currency from your country’s currency to Euro will have to take place. This transaction of money from one currency to another is what we call forex.
Who is a Forex Trader?
Apart from import and travel, foreign exchange may be practiced as a profession by skilled individuals and corporates such as banks, insurance companies, and fund managers. These professionals exchange currency with the aim of making a profit from the transactions. This aspect of foreign exchange is what we call Forex Trading while someone who engages in this trade is called a Forex Trader. Forex trading therefore is the practice of exchanging currencies with the sole aim of making a profit. A forex trader is trained to time favorable market conditions to know when to enter and exit the markets at a profit. With proper training, individuals have ventured into the world of forex trading as a full time business. All that is required is a desire to learn and a laptop with stable internet connection. With that, you can start trading forex at the comfort of your home.
How are Profits made in Forex?