What is forex trading in simple terms

Spot forex or the Foreign exchange market is the buying and selling foreign currency. In the FX market, you can sell one country’s currency and buy another country’s currency. In this piece of content I will cover what is forex trading in simple terms, how to make money from Forex market, advantages of Forex trading & some more basic facts regarding forex.

What is forex trading in simple terms
What is forex trading in simple terms

How to make money from Forex market?

Currencies of different countries are always changing. You will see in the newspapers that sometimes the dollar is getting stronger against the EURO, and sometimes the EURO is getting stronger against the dollar. You can sell dollars and buy euros if the euro goes up against the dollar. Again, if the euro is strong against the dollar, you can get more dollars by selling the euro.

When I invested in the stock market, I got a 100 USD from my family. I wanted to increase the price of share which I invested. And when the price increased I made profit.

But forex market is different. Suppose you had $ 100 which you sold and bought for 80 euros. You later sold the euro for $ 120. That way you can make money. We can make a profit only if the share price increases (buy) in the stock market. But in the forex market, whether the currency is strong or weak, we have the opportunity to make a profit, which is the biggest advantage of the forex market.

What is forex trading in simple terms

When buyers and sellers transfer currency between them at the fairest price, their network is called the forex market. And the transactions they made are considered forex trading. In these transactions, not only individuals but also big companies, institutional traders, and central banks also take part. While most of us take part in the foreign exchange market for our day-to-day purposes, most currency transactions happen to make a profit. Who ask what is forex trading in simple terms and want to get shortcut answer this paragraph is enough for you to understand the core concept of forex trading briefly.

Advantages of Forex trading

What is forex trading in simple terms

Anyone can trade

Trading in the Forex market has traditionally been the privilege of the wealthy or of the banks, but today, with the emergence and increasing competition of various Forex brokers, anyone can trade in the Forex market from anywhere in the world.

Need very little amount

It’s possible to begin forex trading with only one dollar. In addition, most brokers let you trade for free demo accounts, which means that you can start trading with virtual money. So first you can prepare yourself by trading demos for free and if you succeed, you can start real trades with real money.

Top most biggest market

The forex market is the most important market in the world, more important than the stock market. The biggest stock market in the world is the New York Stock Market and the size of the forex market is 25 times larger than that. Remember, the value of the dollar or the euro is not determined by the government of any country. The value of the currencies of different countries varies according to the economic conditions and financial events of different countries. Dollars or euros will be bought and sold in all countries of the world at the same price at which you buy dollars or euros.

Benefits of leverage

Large leverage or loan facilities are available for trading in Forex market, and so you can make good profits by making relatively small movements in the market.


Scalping is a very popular term in Forex. It refers to an open trade for a very short time. Many people open a trade for 10 or 15 seconds and exit the trade with a profit.

24/5 market

The Forex Market is open 24 hours a day, 5 days a week, Monday to Friday. You can trade at any time in the Forex market, whether you are a trader or an employee.

Work from home

You can trade Forex at home. Thus you can give a lot of time to your family. But for that very reason, you need to dig deeper regarding successful forex strategies. If you stuck to “what is forex trading in simple terms” and acquire fatigue & basic knowledge regarding trading, you only complain about why others make money and you can’t.

Easy to deposit and withdraw

It’s very easy to deposit or withdraw from an account in the foreign exchange market, because you have to do everything online.

Manage other’s account and take profit

If you can trade well, many will deposit with you, and if you manage their trade, you can get a part of their profit.

Potential to make huge fortune

A successful and efficient Forex trader can make a lot of money.

Things to consider

It’s worth mentioning that in the Forex market to be a successful trader, you have to know a lot about this market. It is possible to earn money from Forex trading without knowing anything. But to survive in the long run, you need to become an expert in the Forex market.

In other words, there is no such thing as a recession in the forex market. Because in the stock market you can only buy, but in the forex market you can also sell.

The Fun fact is that, When stock market is going down and down, in forex, one currency is always up!

What do you need to do Forex trading?

It’s enough if you have a PC or Windows Mobile that has internet connection.

How do you buy and sell dollars or other currencies?

To trade Forex, first of all you need to open an account with a Forex broker. Account can be easily opened online in 2 minutes. You can instantly deposit into your account with various online currencies like PayPal, Neteller, perfect money, skrill etc.

And if you complete these steps, then it’s time to start trading Forex.

Most people make deposits with Forex brokers through banks. In that case, once you open the account, you’ll get the details of your broker’s bank account number and bank deposit’s details process.

Once the deposit in your account is complete you will be able to start trading. Forex trading is done through online software. You can download this software for free from your broker’s website. After installing the software and signing in with the username and password provided by the broker, you can start trading the various pairs, as well as manage your portfolio.


Many want to know What is forex trading in simple terms but giving answer of this question in simple terms is really tough. Still I tried my best to give you a short and precise idea about forex trading and the advantages of this market. If any newbie gone through the whole article attentively then this one content is enough for him to know the basics of the forex market.