SADDLE RIVER, NJ--(Marketwire - Nov 15, 2012) - The world of forex or 'FX' trading can seem impenetrable to novice traders, but with a little learning and preparation, you can potentially learn to trade these markets with confidence.
Forex is short for foreign exchange. In the context of market trading, the term forex means the exchange or trade of one currency for another. There are a number of different factors which affect the value of a given currency, such as interest rates, geopolitics, and economics -- even natural disasters. This is an example of a currency 'pair,' which would typically be traded in the forex market:
EUR/USD (or Euro Dollar, for short) allows you to buy the euro while simultaneously selling the dollar, for example.
How does forex trading work?
Say you believe the value of the euro will depreciate against the US dollar over the next few weeks due to economic conditions.
You decide to take a short position on the EUR/USD currency pair and sell the euro against the dollar. Over the following weeks, the market moves as you predicted: depreciating the value of the euro against the US dollar.
In this case, you'd stand to profit for every pip, or 'percentage in points' that the euro falls against the US dollar. However, as forex trading is a leveraged product, you could stand to net losses exceeding your deposits if the trade was to move against you, i.e., in this case if the euro strengthened against the US dollar.*
Ensure you understand the risks before diving into the world of forex trading.
Forex trading involves a substantial risk of loss and is not suitable for all investors.
*FX Solutions asks that you consider the risks associated with increasing your leverage. A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit; this may work against you as well as for you. You may sustain a total loss of account deposits and you may be required to deposit additional funds to cover a short margin position.
About FX Solutions:
FX Solutions, LLC is a leading foreign exchange broker with a focus on advanced trading technologies, transparency of transaction and unparalleled customer service. FX Solutions serves retail clients institutional trading partners and introducing brokers in over 100 countries.
For more information, please visit http://www.fxsolutions.com/