Forex Trading is trading one currency against other currency. For example, in UK the currency in circulation is called the Pound (GBP) and in the United States the currency in circulation is called the US Dollar (USD). An example of a forex trade is to buy the Pound while simultaneously selling US Dollar. This is called going long position on the GBP/USD. If you sell GBP while simultaneously buying US Dollar, this is called going short position on the GBP/USD.
If you have opened long position on the GBP/USD and GBP increase relative to USD, you will receive the profit. If you have opened long position on the GBP/USD and GBP increases relative to USD, you will receive the profit. But if GBP reduces relative to USD, you will receive loss.
Forex Trading Example
The current quote for GBP/USD is 1.67113/1.67130 and you want to sell 1 standard lot of 100,000 Pounds at 1.67113 , for a total value of US$ 167,113 (100,000 * $ 1.67113 ).
Stop Loss level 100 pips = 1.67230
Take Profit Level 200 pips = 1.66930
As you expected, the Pound strengthens against the U.S. dollar and you take your profit at 1.66930 , closing out the trade. As each pip is worth US$10, your total profit for this trade is $2000
Required Disclaimer: This example is for illustration only. All trades are unique and past results are not necessarily indicative of future performance.
Online Forex Trading
Trader may exercise forex trading through a brokerage company. For online forex trading your brokerage company will provide you with forex trading software (trading platform). Orders can be placed with just a one or few clicks and the broker then passes the order along to a partner in the liquidity provider to fill your position. When you close your trade, the broker closes the position on the liquidity provider and credits your account with the loss or gain. You can place order manually or automatically using forex robot (expert advisor). You can trade with forex robots if your platform and your broker supports forex trading in automated mode.
Forex Trading Videos
Bollinger Bands
Relative Strength Index (RSI)
Simple Moving Averages (SMA)
Forex Trend