What is Forex Trading?

“Forex” stands for “foreign exchange”. Forex trading is the process of buying one currency and selling another currency simultaneously. Such a trading take place in “pairs” where one currency is exchanged for another. For example, 

• In EUR/USD, the Euro is traded against the U.S. dollar.

The primary aim is to benefit from changes in the exchange rate between the two currencies. Continuing with the above example

• Suppose a trader buys EUR/USD.
• The Euro rises in value against the dollar.
• Now, the position may generate a profit.
• In contrast, if the exchange rate moves in the opposite direction, the trader may incur a loss.

Thus, forex trading for beginners might be risky due to high volatility and leverage. New traders may take time to understand the market and practice via a demo account first before trading with real capital. 

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