Community Answers

1. 

   10-7-11

   Marianne Parker says:

   Forex stands for “Foreign Exchange”. Forex trading involves trading in foreign currencies. For example, I may have an account with $1000, and the price of the Euro is $1 = 0.90 Euro, which means the same as $1.11 = 1 Euro. That means I could buy 900 Euro. Later, the Euro may rise, and now the price is $1.25 = 1 Euro, which means that $1 = 0.80 Euro. My 900 Euro is now worth $1125, and I sell and make a $125 profit.

   Forex trading often involves trading on margin. So in my margin account, I may deposit $1000, and be able to buy 100 times that amount worth of foreign currency. If you trade well, you can make up to 100 times as much money. But if you guess wrong, even a small move will cause a full loss of all the money in your account. It is wise to spend a great deal of time studying and practice trading before thinking about investing in Forex for a living.

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