What Is Forex Trading? – A Guide to “Forex trading for Beginners”
When it comes to forex trading, there is a lot of information out there. It can be overwhelming for a beginner. Where do you start? What do you need to know?
Let’s start with the basics. Forex trading involves buying and selling of currencies. When you trade forex, you are effectively betting on the value of one currency versus another. For example, if you think the US dollar will go up in value against the Euro, you would buy USD/EUR. If the US dollar goes up in value, you make money. If it goes down, you lose money.
It’s important to note that in forex trading, you are always trading two currencies at a time. The first currency is called the base currency and the second currency is called the quote currency. In the example above, the USD is the base currency and the EUR is the quote currency.
When buying or selling a currency pair, you are really buying or selling the base currency. The price of a currency pair is always quoted in terms of the quote currency. So, in our example above, if USD/EUR is quoted at 1.20, that means 1 US dollar buys you 1.20 Euros.
Now that we’ve covered the basics, let’s look at what you need to know in order to trade forex.