Forex Trading is trading currencies from different countries against each other. Forex is acronym of Foreign Exchange. For example, in Europe the currency in circulation is called the Euro and in the United States the currency in circulation is called the US Dollar. An example of a forex trade is to buy the euro while simultaneously selling US Dollar. A forex trader would enter a position called a call if they think that the euro against the US dollar will go up in value or a put if they think the euro will go down in value. In forex retail trading currencies are traded in contracts of values exceeding 100,000usd. This makes investing high risk and costly. With high risk traders need mechanisms to protect themselves against losing huge sums too quickly. Therefore the technical side of entering a forex trade is very complicated.

By Barry Norman, Investors Trading Academy.