What Is Forex Trading And Is It Right For Me?

There are very few investors who have consistently made massive fortunes over a while.

Jim Simmons, a quiet recluse, has been successful with smaller frequent trades in his Medallion fund.

On the opposite end of the spectrum is the brash George Soros, who publicly “Broke the Bank of England” and made billions in a single forex trade on Black Wednesday.

Forex trading refers to the foreign exchange markets where investors and traders worldwide buy and sell one currency for another.

What Is Forex Trading?

You might have even participated in forex trading without even realizing it. Anytime I visit a foreign country, I exchange my U.S. dollars for the local currency based on the prevailing exchange rate. In its simplest form, that is forex trading.

Forex Trading Terminology

Currency Pairs Traders frequently trade currencies by selling one currency and buying another. Forex trading always involves the exchange of currencies in pairs.

The Major Currency Pairs are the four most heavily traded currency pairs in the forex market. Because of the massive liquidity, you can always trade them with the lowest spread.

Forex Quotes

The EUR/USD is the currency pair, and the price is 1.2209. The price indicates that for every Euro you sell, you could buy 1.2209 USD.

PIP You might have noticed the forex quote has four places to the right of the decimal. The smallest price change that a given exchange rate can make is the pip.

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