Foreign Exchange, or as some people refer to it: “Forex Trading”, “FX”, or “Currency exchange”, is the largest financial

market in the world.


Thus,  Forex trading simply means that you simultaneously buy one currency and sell another, for example

buying Euros in exchange for US Dollars.

Because as long as two countries traded with each other, they needed their currencies exchanged.

That is the reason it is the oldest existing market.



How Does Forex Trading Work?

If you live in the United States and would like to travel to Europe, you’d have to exchange your $$ for Euro right?

That is a yes. Foex trading was once just something that people had to do when traveling to other countries.

They would exchange some of their home countries currency for another and endure the current currency exchange


If you want to trade the Forex market for profit, you will open a trading account with an online broker as opposed to

going to a shop to exchange your travel money.

This way you can buy and sell currencies from the comfort of your home.

This also gives you other advantages, such as limiting your risk and leveraging your funds.

The Forex market has no central market place like the Nigeria Stock Exchange or London Stock Exchange.

These exchanges have one physical location where buyers and sellers meet and trade.

Unlike these stocks and futures markets, currencies are traded between banks around the world, 24 hours a day 5 days

a week.

Trading is done via phone, chat or an electronic network.

Currencies are quoted in pairs. For example trading the Pound for US Dollars means trading the pair GBPUSD.

These are some of the pairs traded in the Forex market:

  • EURUSD (Euro and United States dollar)
  • USDJPY (United States dollar and Japanese Yen)
  • USDCHF (United States dollar and Swiss Franc)
  • GBPUSD (Great British Pound and United States Dollar)
  • AUDUSD (Australian Dollar and United States Dollar)
  • USDCAD (United States Dollar and Canadian Dollar)

The first listed currency is called the “base” currency which is the basis for the buy or sells transaction.

The second listed currency is called the “counter” or “terms” currency.

These is what am trying to say:


If you place a buy order for the EURUSD pair.

That means you have sold US dollars and bought the base currency, which in this case is the EURO (EUR).

Profiting from the Forex market how possible?

Yes, you can make a lot of money.

You can make as much as possible in Forex Trading online and also loose as much as possible but don’t be scared, as

long as you have the right knowledge you will be consistent in making profit.

In the Forex market, trillions of $$ flow around the world each and every day.

It’s time you claim your share of this big pile!

As opposed to the stock market where you buy and sell actual parts of a company, in the Forex market you are selling

currencies of countries around the world.

Your goal is to buy a currency pair at a low rate and sell back when it rises to a high rate.

The opposite is also true: selling a currency at a high rate and buying it back at a low rate.

In other words, there are two types of trades you can do:

Buy a currency pair:

This means you buy the base currency, in the case of the EURUSD you buy the Euro.

Because it’s the foreign exchange market, and you’re dealing with a pair of currencies, it means you exchanged (sold)

Dollars for the Euros you bought.

Now, suppose after you bought EURUSD, the currency pair became more expensive.

That means the same 100,000 Euro you bought just a while ago for $124,500 might now be worth $125,000.

If you were to close that trade (sell the EURUSD) your account would register a profit of $500. Of course, if the rate of the

EURUSD went down instead of up, it would have been registered in the trading account as a loss.

In the example below we bought the EURUSD at 1.2979 and a few seconds later it increased in value to 1.2983 

(+4 pips).

A pip is the smallest price change that a given currency pair can fluctuate. Each point of change is called a “Pip.

When placing an order for the broker to buy or sell, you have to specify the quantity of the base currency to buy or sell.

This quantity is defined in terms of “Lots or Size”.

The Quantity of base currency you buy or sell determines your profit regardless the number of pips.

Our profit, as seen in the right corner, is $40 using 1.00 Lots Size, if the Lots size is lesser than the one used the

profit too will be less.


Sell a currency pair:

You sell the base currency, which in our example is the Euro. What have you bought in exchange?

You guessed it: selling EURUSD means you sold Euro and bought USD.

Suppose after you sold the EURUSD, its rate went down.

That means the Euro got weaker vs. the Dollar.

You can look at it the other way around and say that the Dollar became stronger vs. the Euro. Either way you look at it,

since you bought Dollars and now they are worth more against the Euro, you made a profit.

Of course, if the rate of the EURUSD went up, our Dollars are now worth less Euro, and it would have been registered in

the trading account as a loss.

  • In the example below we sold the EURUSD at 1.3011 and a few minutes later the rate was 1.3000.
  • When selling 1 lot of this currency pair, a drop of 11 pips means a profit of $110 as seen on the right corner.



Making Profit trading Forex online is an achievable goal if you get educated and keep your head together while you’re



The first thing you need in forex trading is the right Knowledge:

If money is your hope for independence you will never have it.

The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.

Without the right knowledge you can’t succeed in the Forex business because you have got to understand the use of the

right tools and also how to manage your fund appropriately in the Forex market.

Therefore, Knowledge has to be improved, challenged, and increased constantly,

Also Read: The true meaning of price movement analysis in Forex

The Right person who can tell you the fact and not the myth:

What you want in a mentor is someone who truly cares for you and who will look after your interests and not just

their own.

Therefore, selecting the right person for the right job is the largest part of coaching.
What you need is someone that you think can help you out with this business without hiding anything from you.
When you come across the right person to mentor you, start by showing them that the time they spend with
you is worthwhile.
A Reliable Broker (Retail Shop):

Forex trading is usually done between banks, companies and other institutions.

Banks usually do not cater to the needs of the individual currency investor or speculator.

It is only Forex brokers who enable you trade Forex with them on low commissions, create the possibility for small

deposits and small trade sizes, online access, ability to trade using an automated robot and many other advantages.

Brokers are called Brokers because they can make you broke if you are not careful.

You need to have a reliable broker where you can exchange your currencies without being manipulated.

Even if you have the right tool and the right knowledge as long as you are using a bad broker you can’t succeed in this

Forex business. So be Careful.

Any Devices Such as Computer, Smart Phones, Tablets and Internet Connection:

I think it’s fair to say that personal computers have become the most empowering tool people have ever created.

Foreign exchange is traded online because you don’t need to travel to other countries to exchange currencies.

That is the reason it is called Forex trading online with the help of the internet and computer or other devices such as

smart phones and tablets you can trade from anywhere in the world.

When can I trade Foreign Exchange?

Because currencies are traded all over the world, you can trade anywhere at any time if you are connected to the

internet that is the reason it is called Online Forex Trading.

The Forex market operates 5 days a week (Monday-Friday), 24 hours a day.

Due to the continuous trading, there are times when different world markets give their best money-making


In general the trading day can be divided into three sessions (all times GMT).

The busiest trading in these markets is between the “Start” and “End” hours of each session.



How Much Do I Need to Start Forex Trading?

This is another simple question people don’t know about.

Research shows that the amount of capital in your trading account can affect your profitability. 

You can start making money in forex trading with anything you have.

What you should keep in mind is that your strategy determines your capital, like in any business.

The amount you will need to start a business depends on your strategy.

Not all traders are alike though, and not everyone trades the same way.

However, it is important to keep in mind that the amount of capital a trader have at his disposal will greatly affect his

ability to make a living from trading. In fact, capital’s role in trading is so important that even a slight edge can provide

great returns.

Every trader dreams is using a small amount of capital and becoming a millionaire off it.

The reality is that it is unlikely to occur by trading a small account. thou profits can accumulate and compound over

time, but the trader with small account often feel pressured to use large amounts of leverage or take on excessive risk in

order to build up his accounts quickly which may eventually cause account loss.

Therefore always put in mind that before investing into Forex business your strategy will define the capital you need .

Nothing is too small and nothing is too large. Your Strategy defines everything.




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