Many people hear the term forex trading but don’t know what it is. Forex is short for ‘Foreign Exchange.’ Forex trading is the largest financial trading market in the world with a daily turnover of approximately $4 trillion. To give you an idea of how big that is, by comparison, the New York Stock Exchange has a daily turnover of just $75 billion. In the foreign exchange market you are investing in currency between nations based on speculation. The forex was formed to facilitate trade between nations and to expedite international business, but the Internet means that anyone can trade in forex online. Online forex trading can be a tricky business, so it’s good to understand some basics and before wading into more advanced topics.

Some fundamental principles: in forex trading you trade currency in pairs. The Australian dollar versus the US dollar would be articulated as AUD/USD. If the quote for AUD/USD is 1.05422, that means that every US dollar is equivalent to 1.05422 Australian dollars. This means the Australian dollar is a stronger and more valuable currency. As a person engaged in forex trading, you make your profit by selling a particular currency when its value increases in relation to another currency, and at the same time buying another when it’s low in value. This is known as ‘entering a position’.

So you think online forex trading is for you? The first thing you need to do is find a good broker. Forex trading and forex online is less regulated than the stock exchange, so you may be more prone to unscrupulous brokers. If you are an individual trader, you cannot trade in the market directly, so in order to do forex online or forex trading offline, it is imperative that you open an account with a reputable broker. The rise of online forex trading began in the late 1990’s and with it a number of new brokers that were nothing more than con artists. Do yourself a favour and avoid some heartache by doing some solid research and finding a good broker.

Once you find a broker to help you trade forex online, develop a strategy with him or her. There are many tried and true Forex trading stratagems, and the good news is that many of them are available on the internet for free. Choose a strategy for online forex trading that suits your style and that you’re comfortable with, and then stick with it. The second part is probably going to be the more important factor in determining whether you’re successful or not in forex online.

An excellent advantage to having a broker is that he or she will know that you are inexperienced in forex trading. Many brokers offer practice trading accounts where you’re able to trade fake money under current market conditions in real time. It’s the equivalent to being able to play at a casino poker table with fake chips so that you can learn how to play the game before putting your own money at stake.