| Success in FOREX trading is a matter of having the | | | | today's trading the the value of one US dollar to the |
| right knowledge and the right timing of the market. If | | | | British pound is: 1 = 1.9534. In other words, one GBP is |
| you can combine these two elements, you have an | | | | valued at $1.9534 dollars. |
| opportunity to succeed in trading the FOReign | | | | Depending upon which direction the two currencies are |
| EXchange (FX or FOREX) market. | | | | expected to go during the course of the day's trading, |
| Until very recently, the forex markets had been the | | | | one could buy a contract on one or the other currency |
| trading grounds of the ultra rich and thus out of the | | | | in order to initiate a trade. And then once that currency |
| reach of the average person. The trading units during | | | | has made its move, sell that contract back in order to |
| that time were just too large for most ordinary | | | | extract the profit from the trade. An open position on |
| investors to handle. Today, though, because there are | | | | the forex is a trade in which a trader has bought or |
| foreign exchange brokers who have broken down the | | | | sold a particular currency pair without having made a |
| larger sized inter-bank trading units into smaller units, it | | | | corresponding trade to buy or sell back the equivalent |
| allows more people to become involved in trading on | | | | amount to close the trade position. |
| the forex. | | | | Prices are quoted to the fourth decimal point in the |
| What follows are a few thoughts on the basics of | | | | forex market. For example, the GBP/USD might be bid |
| trading in this specialized market. This section | | | | at 1.9534 and offered at 1.9537. Profits are recorded in |
| constitutes having the right knowledge element from | | | | terms of pips or "percentage in point." A pip is the |
| the above formula. As it continues, you will see where | | | | smallest price change in forex trading - for most pairs |
| the right timing aspect comes into play. | | | | this is equal to .0001 or one one hundredth of one |
| Trading on the foreign exchange market involves the | | | | percent, or one basis point. In the above example, we |
| trading one currency for another. Each day, due to | | | | can see that the spread is 3 pips wide. |
| international trade and business elements or the political | | | | The only exception to this method of computation is |
| or current events in the various countries whose | | | | the Japanese Yen (JPY), which is quoted only to the |
| currencies are being watched, any given currency | | | | second decimal point. For example, 117.89 in JPY to the |
| may fluctuate in price. A profit can be had in the FX | | | | US dollar equals one dollar being worth 117.89 yen. |
| by knowing when the currency of one country will | | | | Learning how to trade on the forex market requires a |
| fluctuate as against the currency of another country, | | | | different trading mindset from the traditional mindset of |
| and in which direction. | | | | trading on the stock market. In trading everyone has |
| It is important to note that currencies are always | | | | the same information available to determine the |
| traded and priced in pairs. When trading one foreign | | | | currency fluctuations. In addition, in order to be |
| currency for another, usually the currency listed first is | | | | successful it is helpful to have or be following a |
| the stronger of the two. For example, GBP/USD | | | | system of trading which can help you to choose your |
| indicates the relative dominance in strength of the | | | | trading positions. This can be a system which uses |
| British Pound in relation to the US Dollar. For instance, in | | | | either a fundamental or a technical approach to trading. |