What is Foreign Exchange and Foreign Exchange Market?

Foreign Exchange Market

Foreign Exchange” is actually something everyone knows simply. But to make money from this market, you need to know a little more than that. As you already know, many countries in the world have their unique currencies. All these currencies have different values against each other. And, depending on the economic status and the money events in the countries, the values of the currencies against each other change continuously.

In the meantime, I do not want to continue without mentioning the forex’s relation with the Internet: nowadays Forex transactions are usually being executed online on the internet. Therefore, it is also an excellent option for those who seek ways to “make money from the Internet”. If you have questions such as “How to make money from the Internet?”, “What are the ways to earn money online?”, or “What are the internet earnings?”, Forex is one of the answers to these questions. Although the websites about “Making money on the Internet” don’t take Forex under their subjects, it is quite a reliable alternative, and it is best for you to consider it seriously.

First, let’s start with a short definition of the forex market:

By definition; “Foreign Exchange Market“, is a name for the market that you trade these currencies with others. Following the values of the currencies and trading them at the right time, allow you to make money with foreign exchange.

How to Make Money From Foreign Exchange

Basically, if you buy a certain amount of a particular currency and hold on it until its selling value increase and excesses the amount you spent to obtain, by selling the money have at the new higher value, you can make a serious profit. This trading activity is how you make money on ForeignExchange / or shortly: Forex.

Since in Foreign Exchange currencies are being traded with others, their values are shown in “pairs”. You can see some example currency pairs below;

  • EUR/USD
  • USD/JPY
  • GBP/USD
  • USD/CAD
  • USD/CHF
  • AUD/USD
  • NZD/USD

If you are expecting the value of USD (US Dollars) to decrease, against EUR (Euro), you should buy the EUR/USD pairs in the Foreign Exchange Market and hold it until start rising. Forex traders named this method as; going long (on EUR). Then you can sell it and make a profit.

Vise Versa, you might be expecting the value of USD (US Dollars) to increase, against EUR (Euro), then you should sell your EUR/USD pairs in the Forex market before it does. So, you can avoid the loss and obtain USD which will be more valuable soon. And, Forex traders named this method as; “going short” (on EUR).

You can find detailed explanations for the terms -going long- and -going short- in our related articles.

Foreign Exchange Brokers

All the forex trades are placed to the market through forex brokers. A Foreign Exchange Broker is a mediator which takes on your trade and puts it on the forex market. So, other traders can complete the other side of your trade.

Modern Foreign-Exchange trades are being made completely on computers and online. Traders create accounts on the foreign exchange broker’s platforms and place their trades on the market through their dashboards. The foreign exchange brokers contract with bank networks and carry out the trading electronically almost instantly.

In this article, you should have learned a few additional technical terms related to Forex. We are trying to be short of articles with specific meaningful terms, for ease of learning. For more detailed explanations on ForEx Market, you can check our other articles by clicking on the related links on this page. You can read more about “Currency Pairs“, “Forex Platforms”, “Forex Brokers” and “Forex Dashboards” in our related articles.

 

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