What is Forex trading?

Forex is short for "Foreign Exchange". Refers to the Foreign Exchange trading. Consider two following currencies USD and EUR. Suppose that at the first moment we have 1000 EUR, and 1000 EUR worths 1000 USD. Suppose that we convert EUR to the USD. After a certain period of time, 1000 USD worth 1200 EUR. If we convert USD to EUR, we have 1200 UER and profit of 200 EUR. However, if after a certain period of time, 1000 USD worth 800 EUR and we convert our money we will have 800 EUR and loss of 200 EUR.

Forex market is very liquid meaning that you will probably be able to buy or sell whatever you want to sell at any time. Also, you can use very high margins. On the other side, there are several currencies that are traded activly (USD, EUR, JPY, CHF, GBP). Using high margins you can acquire a gigantic loss as well as gigantic profits.

It is hard to predict what is going on the Forex market. Of course, that stands for any market, but it is especially true for foreign exchange. The main reason is that investor should observe macroeconomics, politics, warfare on the Middle East, etc. For example a certain statement of the Chairman of the United States Federal Reserves can move USD up or down unexpectedly.