The foreign exchange currency market, often called "the Forex," is the world's largest financial market. Daily trading volume on the Forex is typically more than 1, times greater than the combined totals of all stock and equity trading markets worldwide. Every currency in the world is traded through this huge, highly decentralized marketplace, with 15 regional marketplaces and thousands of specialist traders.

A few of the largest U. If you currently have a brokerage account, it's likely you can begin Forex trading through your stockbroker, in most cases simply by filling out a short online currency-trading application. Once you've opened your account, you begin trading by selecting the currencies you want to trade.

Currencies on the Forex always come in pairs. As the value of one of the currency pairs rises, the other falls.

Most beginning traders should trade only the most-widely traded currencies, such as the U. You may believe that the value of the pound is going to rise to against the U.

This tells you a couple of things. First, that the British pound is currently worth about 1. Note that you always buy at the higher price 1. Say you buy 10, GBP at 1. If the pound rises to a selling price of 1.

Your profit equals 10, times 1. You've made your first profitable currency trade.

How Does Foreign Exchange Trading Work?

As you can see from the trade described above, currency trades are highly leveraged, sometimes by as much as 1, to 1. Beginning traders may be attracted to the possibility of making large trades from a relatively small account, but this also means that even a small account can lose a lot of money. Your losses aren't limited to your deposit. A study of forex retail traders concluded that although 84 percent of Forex traders expect to make money in their accounts, only about 30 percent actually do.

A good way to begin is to open a practice Forex trading account. This way you can learn how to trade without spending real money.

If after a few dozen practice trades you see that you're trading profitably, you may then decide to trade in your real Forex account. Search the site GO. Forex Trading Forex FAQs Basics Getting Started Fundamental Analysis Technical Analysis Advanced Trading.

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Updated May 08, Introduction to the Foreign Exchange Currency Market The foreign exchange currency market, often called "the Forex," is the world's largest financial market.

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