What is Forex Trading?

Forex is abbreviation for Foreign Exchange market which is the biggest financial market in the world that every day. The forex market involves selling and buying of currencies 24 hours a day. Every day the billions of dollars exchange hands in the forex market and today it is the only none-centralized finical market.

The forex trading market is based on buying and selling of currencies one for the other, basically a forex trader's goal is to make huge profits by exploiting the minute fluctuations in the forex market every day. A forex trader can issue a sell/buy option to the forex market and make profits within seconds since the forex market is the biggest liquid financial market.

A great advantage of the forex market is Margin trading, which is basically trading with borrowed money. Since you can only make profits by selling thousands of units of currencies it is impossible for traders to trade without margin trading. For example, if you want to make profits from the small fluctuations of the pound (GBP) you'll need to buy 1 lot (which is about equal to 100,000 US dollars) and then wait for it to go up. When the pound goes up a little forex traders sell it and profit from the small gap between the original price and the sell price. Forex traders use small amount of money such as $1,000-$5,000 to invest and reap profits.

Basically this is forex – manipulating the small fluctuations. Some would say that forex is similar to gambling with money on money but the truth is that there are many forex trading systems that predict within a minute error range the future fluctuations of foreign currencies.