FOREX Trading – Learn How To Trade FOREX

FOREX trading (foreign exchange trading) occurs in a foreign exchange market. Basically, it refers to the dealing in currencies from different parts of the world.

The profit margin in this kind of trading is established by ‘exchange-rates’ during the sale or purchase of various currencies.


There are a separate brokers category called ‘FOREX-brokers’ who can aid investors to perform FOREX transactions. FOREX trading promises high gains on the profit front. However, these dealings can be volatile and very risky if not handled with care.

Big financial institutions, companies, and banks all over the world deal in FOREX markets.

Trading Basics

As mentioned earlier, FOREX markets operate by transaction of currencies against one another. Every pair of currency is considered a separate product and marked ‘XXX/YYY.’

Here ‘YYY’ represents the ‘international code for currency’ (ISO 4217) consisting of three letters. The price of a unit of ‘XXX’ currency is revealed through it.

For example, ‘EUR/USD’ is actually the cost of ‘Euro’ presented through ‘U.S dollars.’

There is no single global exchange for a definite pair of currency in this market. Therefore, it is often referred to as an ‘over-the-counter’ market.

There is no end to this kind of trading. It is operational throughout the day and different types of currency-trading sessions take alternating turns.

In FOREX trade, there is a certain FOREX-bid price for which the trading exchange agrees to purchase a particular pair of currency. This is the price a trader has to give to acquire his ‘base-currency.’ This is presented toward the left side of a ‘FOREX currency-quote.’

Similarly, there is a FOREX-asking price. This is the price for which the market agrees to sell a specific pair of trading currency in the exchange.

The bid-price and ask-price in a market symbolizes the difference between the buying and selling rates. It indicates toward the anticipated profit of a FOREX deal.

During large currency-transactions, disparity between the selling and buying price of a trade between the market and a wholesale customer can vary by just 1-2 pips.

A ‘pip’ refers to least price increase in a FOREX trade session. For example, if a EUR/USD bid-price is 1.1914 and its asking-price is 1.1917, the increase is of three pips. However, retail customers are not impacted by this in FOREX-trading.

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