Wikipedia of Finance - e-learning course on Forex Market Wikipedia Chapter - Forex Trading Definition, Examples and Forex Trading Basics

What is Forex Trading? Definition, Examples and Basics of Foreign Exchange


Forex trading or foreign Exchange trading and stock investment are just some of the popular ways of getting additional income aside from building capital reserve. In this forex trading tutorial we will undergo training, which will assist you taking one step ahead as a trader. We will learn and understand what is forex trading, examples, software tools and what are the skills required to become a successful investor.

Forex Trading Definition:

Forex trading means trade between two parties on the price of exchanging one currency against another. Foreign exchange has always been necessary to various people in different countries, and they are useful for international firms as well. For example: You are a Canadian travelling to Europe, in order to pay for the bills and items you bought you need to change your money from Canadian Dollar to Euro. Forex Trading is a type of investment that lets you trade currencies against each other. The first currency in a pair is called the base currency which is the one the value is given and the second currency is the quote currency. When EUR/USD rises it means that the value of euro is getting higher and the value of the dollar is getting weaker.

Why is Forex Trading popular across world?

Forex trading is very popular in financial market as it encourages investors to gain profits from small change in currency rates. Investing in Forex trading can peak you profits, since market trades for 24 hours a day so that you can buy or sell whenever you are available.  Becoming a forex trade is one of the amazing profession worldwide. But this cannot happen overnight it requires lot of analytical skills and lot of hard work. Here we will list out forex trading skills which will help you to achieve your goals being a forex trader or a forex broker.

Forex Trading Skills:

Capability: Willing to bear losses without getting to be enthusiastic.

Confidence: To have confidence in yourself and you’re trading strategies and technique without any fear.

3D’s – Dedication, Devotion and Discipline:  Sparing your time for your research and analysis, taking decisions unemotionally, keeping your calm and keep learning from the mistakes will help you a lot.

Techniques and Strategies: Keep trying various different trading techniques and strategies. Keep look for the best strategy that fits to your long-term or short-term goals.

Adaptability:  Flexibility to change according to economic situations frequently.

Focus: Stay focused on your open trades. Keep daily track of currency rates. Read economical or financial papers to educate yourself regarding demand and supply of currencies.

Patient: You cannot get rich in one day. One have to look forward for highly profitable trading strategies and execute them patiently without getting into any panic situation.

Self-Control: Never over leverage or overtrade your trading account. It’s better to go slow rather than driving fast and getting bankrupt. One thing is very clear that you can only win, if you stay in the game.

Money Management: As an investor or a trader, you have complete freedom of taking advantage of high leverage but you should only take additional advantage when you are expert and undergo complete forex trading training and forex trading education. You need to learn money management before you take decision on trading on high leverage. One have to keep in mind that higher leverage will lead you to higher risk.

Forex Trading Software Tools:

Forex Trading requires careful analysis of the market; traders should know major strategies in the market. Determine when is the perfect time to hold and exit your position and when to enter the market. It also requires the right kind of advisers and software in order to do an excellent job in trading. A program or software will be a great help to support and back up a trader and provide trade signals along the way.

The automated trading makes all the decisions for traders; you are asked to input your data, and it will provide you with a response that will give you the appropriate action to take in order to make profits. The black box is one of the latest automated systems for forex trading. You just need to turn on your computer and the system updates your database, and it also gives advice. While you decide and do everything in the manual trading.  There are other best forex trading platforms and forex trading system that actually works like: ForexTrader, MetaTrader, Tradeable, Bladerunner, Forex Fractal, etc.

The ability to make money and protect your investment is one of the main reason why you should have a forex trading system. You may encounter a lot of guides and advice with regards to forex trading, but you must learn lot to deal effectively with the trade regardless of the threats and movements.


Upon entering the business, a trader must know some forex jargons and terminologies to be able to competitive. Going in a country without the knowledge of their native language is also what it feels like when trading without the knowledge of some jargons.

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