Forex market trading or simply Forex trading is primarily trading currencies of two or more countries against each other. For instance, the currency that is in circulation in Europe (with the exception of UK) is called the Euro (EUR) and the same in the Unites States is called the US Dollar (USD). Now, if you purchase the Euro while selling the US Dollar that was in your possession that becomes a Forex trade. By trading terms, this is known as “‘going long on the EUR/USD”.
Though certain people are of the opinion that stock trading and Forex trading are all the same, it is far from reality. Forex traders are benefited from the rise and fall of the value of currency of other countries. Unlike the trading of stock market, Forex trading does not take place in any central exchange. The market for foreign exchange is an OTC (over-the-counter) market.
Hence, a common man in the street should know that how much he can be benefited from Forex market trading, which is basically trading of currencies in pairs. The primary job of a Forex trader is to sell the currency of one country to buy the currency of another. Traders generally trade currencies like GBP, CAD, JPY, USD, CHF, EUR and AUD. The basic reason for choosing these currencies is that the rise and fall of their values is predictable as a trader always likes to be sure of the profit or loss he is going to face. This is the reason the traders follow the behavior of the currencies of these particular seven currencies.
The traders should follow the tried and tested Forex market trading strategies in order to excel. The classical strategy of the business is to choose a pair of currencies like say EUR/USD. Here, the first currency is known as the base currency whose value always remains 1 and the second one is called the variable. Watching the Forex trading news can also be a very effective way of learning.
If the traders like to make more profit, they should choose other major currencies and then compare their values with other. It is better to choose your favorite currency as the base currency.
Sometimes traders who cross multiple currencies might face some problems in terms of keeping track of pricing and chart. In this situation you may use Forex automated software that is capable of keeping all the track records with the rising and falling of the value that you want to keep stock of. The software should ring an alarm bell for the traders in case of a price rise so that the trader can get into the market and can purchase a trade.