What is forex?
Trading the foreign currencies is called forex profession or spot forex. You can buy a currency of a country by selling a currency of another country. Full meaning of forex is “Foreign Exchange” or Foreign Currency Exchange”.
For example, dollar or USD is the currency of USA and pound or GBP is the currency of UK. You can buy pound by selling dollar. On the contrary, you can buy dollar by selling pound. In addition, you can buy or sell currencies of different countries instead of dollar or pound.
How can we earn from forex market or Forex Profession?
Currency is always variable. The price of the currencies will never be constant or fixed. You might have seen that dollar is being strong against pound, pound is being strong against dollar hereafter. The price all of the currencies of the world is changed like that. So, If you buy dollar, you only can sell dollar after increasing its price against its opposite currency. I think you need a little explanation. You can buy euro (EUR) by selling dollar (USD) when the price of Euro is fairly low against of Dollar. Then you have to sell the euro when its price becomes stronger than dollar.
For example, you have bought 80 euro by selling 100 dollar. You have got 120 dollar by selling the Euro after increasing the value of euro against of dollar. So, your profit is 20 dollar by investing 100 dollar in the trade. Do you understand?
There is always traded into a currency pair in forex market. The common currency pairs are-
EUR/USD = Euro/US Dollar
GBP/USD = Great Britain Pound/US Dollar
USD/JPY = US Dollar/Japanese Yen
We can buy or sell both in a currency pair. We can profit if only the price of shares increases in the Stock Market. But we can profit by selling or buying both in the forex market. This is the main difference between stock market and forex. You never have to keep patience in the period of recession or slump of the market in forex. Because, there is no recession or slump in the forex market.
“When stock market is going down and down, in forex, one currency is always up!”
I think, this is a great advantage of forex profession.