Forex Tutorial: The Forex Market
  1. Forex Tutorial: Introduction to Currency Trading
  2. Forex Tutorial: What is Forex Trading?
  3. Forex Tutorial: Reading a Forex Quote and Understanding the Jargon
  4. Forex Tutorial: Foreign Exchange Risk and Benefits
  5. Forex Tutorial: Forex History and Market Participants
  6. Forex Tutorial: Economic Theories, Models, Feeds & Data
  7. Forex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies
  8. Forex Tutorial: Technical Analysis & TechnicaI Indicators
  9. Forex Tutorial: How To Trade & Open A Forex Account
  10. Forex Tutorial: Currency Trading Summary

Forex Tutorial: Introduction to Currency Trading


Contributors include: Kathy Lien, Boris Schlossberg, Casey Murphy, Chad Langager and Albert Phung

The foreign exchange market (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.

Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. In the retail forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for currency traders.

Extreme liquidity and the availability of high leverage have helped to spur the market's rapid growth and made it the ideal place for many traders. Positions can be opened and closed within minutes or can be held for months. Currency prices are based on objective considerations of supply and demand and cannot be manipulated easily because the size of the market does not allow even the largest players, such as central banks, to move prices at will.

The forex market provides plenty of opportunity for investors. However, in order to be successful, a currency trader has to understand the basics behind currency movements.

The goal of this forex tutorial is to provide a foundation for investors or traders who are new to the foreign currency markets. We'll cover the basics of exchange rates, the market's history and the key concepts you need to understand in order to be able to participate in this market. We'll also venture into how to start trading foreign currencies and the different types of strategies that can be employed.

Forex Tutorial: What is Forex Trading?

  1. Forex Tutorial: Introduction to Currency Trading
  2. Forex Tutorial: What is Forex Trading?
  3. Forex Tutorial: Reading a Forex Quote and Understanding the Jargon
  4. Forex Tutorial: Foreign Exchange Risk and Benefits
  5. Forex Tutorial: Forex History and Market Participants
  6. Forex Tutorial: Economic Theories, Models, Feeds & Data
  7. Forex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies
  8. Forex Tutorial: Technical Analysis & TechnicaI Indicators
  9. Forex Tutorial: How To Trade & Open A Forex Account
  10. Forex Tutorial: Currency Trading Summary
RELATED TERMS
  1. Forex Spot Rate

    The current exchange rate at which a currency pair can be bought ...
  2. Forex Market

    The market in which participants are able to buy, sell, exchange ...
  3. Forex Option Trading

    A security that allows currency traders to realize gains without ...
  4. Forex Account

    The type of account a forex trader opens with a retail forex ...
  5. Forex Training

    A form of instruction or mentorship that provides information ...
  6. Forex Market Hours

    The hours during which forex market participants are able to ...
RELATED FAQS
  1. In the forex market, how is the closing price of a currency pair determined?

    The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, ... Read Answer >>
  2. What types of accounts are available for forex trading?

    There are many different types of forex accounts available to the retail forex trader. Demo accounts are offered by forex ... Read Answer >>
  3. Where is the central location of the forex market?

    There is no central location of the foreign exchange market, often referred to as the forex (FX) market. Transactions in ... Read Answer >>
  4. What are the most common market indicators forex traders follow?

    Learn the most common technical indicators that forex traders and currency market analysts utilize to predict likely market ... Read Answer >>
  5. Is scalping a viable forex trading strategy?

    Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is ... Read Answer >>
  6. How is the value of a pip determined?

    Learn how the pip is used in the pricing of a currency pair in forex trading, and see how the foreign exchange market is ... Read Answer >>

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