Guide to Forex Trading (2024)

Trading
Guide to Forex Trading

Foreign exchange (Forex) trading is the trading of one currency for another on financial markets. These markets determine the exchange rates between currencies and often involve complex derivatives such as swaps. Going from the world of stock trading to that of Forex trading requires learning a whole new set of skills.

Forex Trading Guide

How to Buy Chinese YuanByJ.B. MaverickUpdated Sep 30, 2021 How Forex Trades Are TaxedByBarclay PalmerUpdated Sep 16, 2023 5 Forex Careers for Financial ProfessionalsByNick LioudisUpdated Sep 18, 2022 How Currency-Hedged ETFs WorkByGreg McFarlaneUpdated Mar 08, 2024 An Introduction To Trading Forex FuturesByZaw Thiha TunUpdated Aug 25, 2021

Frequently Asked Questions

Why do people trade currencies?

People trade currencies for two main reasons. The first is to hedge against currency fluctuations. If a multinational company wants to ensure that its profits are not disrupted by the swings of a particular currency, it can use forex markets to lock in a particular exchange rate so it can remove that source of volatility from its business. Secondly, people trade currencies because they think they can make money as traders, buying and selling currencies in an attempt to make a profit.
Learn MoreProtect Your Foreign Investments From Currency Risk
What is Forex trading?

Forex trading, short for foreign exchange trading, is the practice of trading different world currencies on financial markets. Currencies can be traded directly in the spot market or using a variety of derivatives contracts such as forwards, futures, and swaps. Forex spot trading does not occur on an exchange, only over-the-counter (OTC), and goes on 24/7.
Learn MoreHow Do You Fund a Forex Account?

See Also
Money Matters: Currency, Exchanging Money, and Tipping in Costa Rica - Two Weeks in Costa Rica Unveiling the Power Play: How Interest Rates Impact Currency Values in Forex Trading How to learn more about credit booms and financial crises 7 Travel Tips You Need for Travelling Hong Kong on a Budget
How much do Forex traders make?

There’s no set amount, or even a range for what forex traders make. How much you make depends on market conditions, if you’re an independent trader or working for a trading firm, and your skill at trading.
Learn MoreForex Trading Career: Pros and Cons

Key Terms

GBP
GDP is the currency abbreviation for the British Pound Sterling. The GBP is the currency of the United Kingdom (U.K.) and is one of the most highly traded currencies.
Learn More
Currency Peg
See Also
EliteMarketMovers : FOREX - BLU FX
A currency peg is a policy by a nation to set a fixed exchange rate between its currency and one or a series of other currencies. This can stabilize the value of a country’s currency but limits monetary policy. Pegs can also be undermined by market conditions.
Learn More
Legal Tender
Legal tender is something that a country’s law recognizes as money. A country’s currency is legal tender and laws establishing what is legal tender make commerce easier by making it clear what people have to accept as money.
Learn More
Quid
Quid is a nickname for the British Pound Sterling. It is the currency of the United Kingdom (U.K.).
Learn More
Nominal Effective Exchange Rate (NEER)
NEER is the weighted average of a currency’s exchange rate with a group of other currencies, usually referred to as a basket of currencies. This is a measure of how strong a currency is on forex markets.
Learn More
Forex Trading Robot
Forex trading robot is the nickname given to automated currency trading. The software used to make these trades buys and sells currencies according to specific algorithms.
Learn More
Forex Hedge
A forex hedge is a strategy to help offset the risk of currency fluctuations when investing or doing business. This can be done by using currency futures and swaps, among other methods.
Learn More
Interest Rate Differential (IRD)
An IRD is the difference between two interest rates between two assets. The IRD is used to compare investments in forex, fixed income, and other markets.
Learn More

Safe Haven Currency: Definition, How It Works, How to TradeByAdam HayesPublished Jun 23, 2023 GBP: History and Trading the British Pound SterlingByWill KentonUpdated Jun 29, 2023 Foreign Exchange Dealers Association of India (FEDAI): DefinitionByJames ChenUpdated Jul 30, 2022 Currency Peg: What It Is, How It Works, and Fixed Exchange RatesByCaroline BantonUpdated Jul 12, 2022 Forex Hedge: Definition, Benefits, How It Lowers Risk and ExampleByJames ChenUpdated Jul 11, 2022

Explore Guide to Forex Trading

AllAdvanced Concepts

Forex Trading Robot: Definition, How It Works, and CostsByAdam HayesUpdated Oct 03, 2022 Interest Rate Differential (IRD) Definition and ExamplesByAdam HayesUpdated Jul 07, 2022 Norwegian Krone (NOK): History, Example, FAQsByJames ChenUpdated Aug 25, 2022 Current Rate Method: Overview and CalculationsByAdam HayesUpdated Jun 06, 2022 Net Interest Rate Differential (NIRD): What It is, How it WorksByAdam HayesUpdated Dec 30, 2022 Cross: What it is, How it Works, and TypesByAdam HayesUpdated Mar 10, 2024 Chinese Depositary Receipt (CDR): What it is, How it WorksByAdam HayesUpdated Jun 12, 2022 Unsterilized Foreign Exchange Intervention OverviewByAdam HayesUpdated Jun 30, 2022 How Fiat Currency Crises Drive Nations Toward CryptocurrenciesByNathan ReiffUpdated May 28, 2023 Currency ETF: Meaning, Special Considerations, ExamplesByAdam HayesUpdated Dec 11, 2023 Non-Deliverable Swap (NDS): Overview and ExamplesByJames ChenUpdated Apr 25, 2022 How Gold Affects Currencies ByKalen SmithUpdated Aug 28, 2023 Big Figure: What it Means, How it Works, StrategyByWill KentonUpdated Apr 25, 2022 Nominal Effective Exchange Rate: Definition and UsesByWill KentonUpdated Jun 30, 2022 Foreign Currency Fixed Deposit (FCFD): Meaning, Benefits, ExampleByAdam HayesUpdated Jun 12, 2022 Legal Tender: Definition, Economic Functions, ExamplesByThe Investopedia TeamUpdated Jun 14, 2021 Understanding the Correlation Between Oil and CurrencyByAlan FarleyUpdated Sep 26, 2022 Foreign Currency Convertible Bond (FCCB) Defined, How It WorksByJames ChenUpdated Aug 17, 2020 Exposure Netting: What it is, How it Works, ExampleByJames ChenUpdated Sep 27, 2022 Eurocurrency Market: Definition, History, and Types of MarketsByJames ChenUpdated May 25, 2022 Purchasing Power Parity: The Big Mac Index ByPermjit SinghUpdated Jan 26, 2022 Temporal Method: What it Means, ExamplesByWill KentonUpdated Jun 08, 2022 What Is a Quid? History of the British Pound Sterling (GBP)ByWill KentonUpdated Jun 19, 2023 Forex Careers: 5 Professional DesignationsByArthur PinkasovitchUpdated Jan 23, 2023 European Currency Unit (ECU): What it Means, How it WorksByWill KentonUpdated Sep 21, 2022 Yuan vs. Renminbi: What's the Difference?ByChristina MajaskiUpdated Dec 18, 2023 Protect Your Foreign Investments From Currency RiskByCathy ParetoUpdated Jul 12, 2022 Global Currency Trade: What It Is, How It WorksByKatrina LambUpdated Jul 07, 2022 The U.S. Dollar's Unofficial Status as World CurrencyByThe Investopedia TeamUpdated Jan 21, 2021 Principal Exchange Rate Linked Security (PERL)ByThe Investopedia TeamUpdated Jul 11, 2022 Eurocurrency: Meaning, Overview, ExamplesByJason FernandoUpdated Apr 21, 2022 Currency Union: Overview, History, CriticismsByJames ChenUpdated Sep 30, 2022 Asian Currency Unit (ACU): What it Means, How it WorksByChris B. MurphyUpdated Nov 03, 2023 What Is a Currency Board? Definition, What Does It Do, and ExampleByWill KentonUpdated Jun 20, 2022 What Was the European Monetary System (EMS)?ByDaniel LibertoUpdated Feb 03, 2024 What Burst the Mississippi Bubble?ByAndrew BeattieUpdated May 31, 2023 Foreign Draft: What it Means, How it WorksByAdam HayesUpdated Jan 31, 2023 Sawbuck: Origin, History of Slang Term For a $10 BillByAkhilesh GantiUpdated Sep 08, 2022 Digital Currency Exchanger (Dce): What It Means, How It WorksByJames ChenUpdated Oct 13, 2022 Currency Strategist: What It is, How it WorksByLucas DowneyUpdated Oct 10, 2020 Currency Adjustment Factor (CAF): How it Works, ExampleByAdam HayesUpdated Feb 25, 2023 How Do You Fund a Forex Account?ByKesavan BalasubramaniamUpdated Jul 11, 2022 Eurozone Definition, History, Member CountriesByWill KentonUpdated Jun 30, 2022 Adjustable Peg: What it Means, How it Works, ExampleByAdam HayesUpdated Oct 19, 2022 Black Wednesday: Definition, Causes, Role of George SorosByWill KentonUpdated Aug 15, 2022 Transfer Risk: What it is, How it Works, ExampleByAdam HayesUpdated Jul 27, 2021 Competitive Devaluation: Meaning, Pros and Cons, ExampleByAdam HayesUpdated May 14, 2023 Best Places to Exchange Currency in Las VegasByTim ParkerUpdated Oct 23, 2021 Spot Commodity: What It is, How It Works, ExampleByJason FernandoUpdated May 28, 2023 Euro Definition, History, Countries That Use ItByAdam HayesUpdated Jun 17, 2022 Chinese Yuan Renminbi (CNY): Overview, HistoryByWill KentonUpdated Jun 21, 2022 Uncovered Interest Arbitrage: What It Is, How It WorksByWill KentonUpdated Jul 27, 2022 Online Currency Exchange: What It is, How It WorksByAdam HayesUpdated Jul 25, 2022 European Terms: What it Means, How it Works, ExampleByAdam HayesUpdated Jun 23, 2022 XenocurrencyByJason FernandoUpdated Apr 14, 2022 Universal Currency Converter: What It Means, How It WorksByLucas DowneyUpdated Jul 27, 2022 Cambist: What It is, How It Works, ExampleByJason FernandoUpdated May 25, 2022 Confederate Dollar (CSD): History, DemiseByJames ChenUpdated Jun 27, 2022 Forex Club: What It Means and how It WorksByAlice ZhangUpdated Jul 11, 2022 French Franc (F): What it was, History, ExampleByJason FernandoUpdated May 13, 2023

Trading

Technical AnalysisOptions and DerivativesFund TradingStock TradingFutures and Commodities TradingFixed Income TradingTrading SkillsTrading Strategies