By Cedric Welsch
If you are looking for forex trading basics, there are a number of websites and books that you can turn to for assistance. This article will explain the basic concept of forex trading and then it will offer you a link to help you get started.
Forex is a shortened version of the terms “foreign exchange”, and it refers to the process of making money through the strategic trading of foreign currency from one currency to another. The currencies used are not of particular importance, and the advice in this article can be used regardless of which types of currencies you are trading.
There are several types of forex trades. The most common one is usually referred to as a SPOT trade. This is when money is traded on the spot as in when you draw money from an American checking account out out of a foreign ATM (automatic teller machine). The bank immediately converts the US dollars into the currency that you are drawing out of the machine. They may also add a surcharge. Another example of SPOT trading is when you trade one country’s money for another country’s money at a currency exchange office at a airport or in a train station. Perhaps the only way to make money with this sort of trade is by sticking the currency in a shoe box under your bed, waiting for the currency values to change, and then, trading the money back to the original currency.
However, that example will not yield a lot of profits so the primary way that investors attempt to make money from forex trades is through options. Basically, options means that you make a projection about a certain currency relationship. You project a trade and a date. For instance, you may project that a United Kingdom pound will be worth two United States dollars on a certain date. You will also commit to an amount of pounds that you are willing to trade on that date. When the date arrives, if the exchange rate is actually one pound equals one dollar and sixty cents, you will make your trade and you will profit forty cents for each pound that you agreed to trade.
For more information, you should visit the finance section of your favorite search engine. On Google, for instance, the webpage is http://www.google.com/finance. Once on that page, you may search for forex. Then, they will link you to a page that will give you forex trading basics including tutorials and videos.
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