Forex Basics
Trading currencies is the buying and selling of currencies with the hope of making a profit when the value of the currencies changes in your favor. The forex market is the largest market in the world with $3.2 trillion average daily turnover making it one of the most exciting markets for trading.
Market Hours
The spot FX market is the only market in the world, which trades 24-hours a day. Somewhere around the world, a financial center is always open, and banks and other institutions exchange currencies, with generally only minor gaps on the weekend. Essentially foreign exchange markets follow the sun around the world, giving traders the flexibility of determining their trading day.
How an FX Trade Works
In this market you may buy or sell currencies with the objective of earning a profit.
A trader sells dollars to purchase 10,000 euros at a EUR/USD rate of 1.33000. (cost US$13,300)
Some time later the trader exchanges his 10,000 euros back into US dollars at the market rate of 1.43000. (receives 14,300 dollars)
In this case the traders profit was 14,300 – 13,300 = US$1,000