What Is Forex Trading …

what is forex

So what is Forex Trading ?

Foreign Exchange trading also know by the common abbreviations (Forex or F.X ) is the exchange of one currency for another at an agreed exchange price.

Forex is the world’s most traded market and has an reported daily turnover from recent Central Bank Surveys… averaging  at $5.3 trillion per day in exchange transactions.

Essentially, Forex trading is the act of simultaneously buying one currency while selling another, This as you would imagine is done with the purpose of growing an investment …..

Currency values rise (appreciate) and fall (depreciate) against each other due to a number of factors. Such as interest rates, economic performance and many other factors

A traders common goal  is to profit from these changes …

To a newbie like myself it all sounds a bit like betting……….and like betting  there are many people out their that believe they can predict results with enough consistency to profit ……In fact their are 100’s of courses, software and other stuff that claims to do just that …..Profit from Forex

So that is the purpose of this site …..To Find Out If they are Telling The Truth……

Before all that i better explain some of the jargon…

A Currency Pair 

This is simply how you trade Forex…you are holding one currency and speculation against another one, Many systems we will be looking at focus on one type of currency and speculate on its performance against the others.

Leverage 

Foreign exchange is a leveraged (or margined) product, which means that you are only required to deposit a small percentage of the full value of your position to place a Forex trade. This means that the potential for profit, or loss, from an initial capital outlay is significantly higher than in traditional trading…… But this also means that you do not need massive amounts of capital (money) to place trades …….with out leverage…. trading would be restricted to the very well off,  ..that said trading with too much leverage is described by most as very unsafe.

PIP’s

Pip stands for Percentage in Points. Most of our currency pairs are quoted to 5 decimal places with the change from the fourth decimal place (0.0001) in price commonly referred to as a ‘pip’. For example, if the price of the EUR-USD currency pair moved from 1.33800 to 1.33920, it is said to have climbed by 12 ‘pips’ (92-80=12). Many systems we will be looking at use this abbreviation to describe the profit potential in a selected trade

Values Rise and Fall

In a currency pair of $USD-£GDP

if you believe the dollar price will fall….. brokers call this trade go short (sell) 

and if you think the opposite and the dollar price will rise your trade is go long (buy)

Forex Signals

A Forex signal is generally a tip or advice to enter a trade on a currency pair. these are normally provided by a expert, a piece of analysis software or from subscription to a Forex signal service. Its a bit like a tip on the horses.

Forex EA’s

E.A stand for Expert Advisor this can be a piece of software written generally for a meta-trader Platform that either advises which trades to place or is programmed to make trades on the users behalf …..so simply its a fancy name for a robot/software that trades for you ….and in many cases these robot are not automated ……their is a guy on the other end. 

Meta-Trader 

A meta trader is put simply an electronic trading platform … it is also independent of the Forex broker. however The brokers that support using the meta trader platform do package their own versions,

The meta-trader platform is most well known for it’s diverse technical analysis or lots of statistics  and the ability to run Forex Robots and Expert Advisor’s.

I do hope I’m explaining things OK

Any question’s do please ask

So on to some testing

Thanks for reading

Paul