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Introduction
Forex (FX) is an acronym for Foreign Exchange and hence Forex trading refers to the trading of currencies from different countries against each other.
With over USD 2000 billion trading per day, Forex is the biggest market in the world, dwarfing the stock market and the best thing is, it is open 24 hours a day!
So how does one earn money in Forex? Forex trader generates profits by speculating whether a currency will rise or fall against the other. You begin by choosing a currency pair that you expect to change in value and placing your order. For example, you spent USD 1,600 to purchase £1,000 today.
A few months later, if the value of sterling pounds versus USD increases, say £1,000 to USD 2000, you would gain USD 400 when you chose to end the trade. Alternatively, one can also hold his currency pair for minutes or days, depending on his own strategy.
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