A Simple Guide for New Forex Users

There are so many forms of online day trading which have taken the internet by storm. This can be overwhelming to new users, especially those who want to break into the scene without losing a lot of money. This can be a challenge without first understanding the difference between these forms of investment, as well as mastering one or more. The former is for another post, but the latter can be started simply by learning what one of these investment forms is. In this post, we’ll talk about Forex investment, and it’ll be written without assuming that you know anything about the subject.

Forex has to do with foreign currency exchange rates, and, in fact, Forex comes from the words Foreign Exchange. It’s a term used in several different ways, across multiple industries. It can refer to the simple trading of foreign currency for local cash, as is the habit of world travelers everywhere money is spent. It is used to describe a process in the remittance and foreign currency exchange industry, where people send small amounts to family and friends in other countries, large amounts to pay for big purchases or university costs, and everything in between. In our case, it’s referring to a form of investment which has thrived online: the form of day trading known as Forex.

Forex is all about anticipating changes in the value of currency pairs. At any given moment, any two currencies you can name have set values relative to one another. But these values are all changing, all the time, and they’re not always changing in the same direction or to the same degree. The amount of Yen that you could get for $10 USD might increase by this afternoon, or it might decrease if the US stock market takes a dive compared and the Chinese market increases.

Rather than being an industry where investors actually buy currency, the kind of Forex we’re talking about allows investors to make investments based on their predictions regarding these currency values. The investor never owns the underlying asset. It’s all about insight, predictions, and foresight.

Depending on the Forex broker that you select, there could be a number of variations to your experience. But a certain set of basics will always be true. 1) You’ll pick out two different currencies, from a section of pairs. 2) You’ll pick out a window of time, usually a few minutes or hours, at the end of which your predictions about values will be measured against reality. 3) You will gain or lose money depending on if you got it right, and how much beyond a predicted point (in your chosen direction) the values changed.

That’s about it. That’s the basics. You should also look for ways to practice without investing your money, until you learn the ropes. Most brokers offer free to play trial versions of their software, where you can do everything just like in real life, without the risk or reward of actual Forex. Now that you know the basics, dig in a little deeper on this and other money blogs, then try your hand at some real Forex trading.