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Fadeyi Oluwaseun
Ladoke Akintola University Ogbomosho
B.tech Marketing Management
Graduate, Nigeria.

Forex trading has become a very popular investment option for many. Here we look at some simple basics of starting Forex trading and making a profit.

Forex Trading for Beginners
Forex is short for foreign exchange and is the global, decentralized trading market of the world’s currencies. Traders, investors, banks, and exchanges buy, sell and speculate on these currencies and in-turn this activity determines the foreign exchange rate. Forex trading for beginners is one of the many contents online done by one of the leading Forex brokers Alpari that guides beginners on Forex trading.

Alpari.org operates in many countries including the UK, South Africa, India as well as Nigeria. They put across factors that new traders should understand before joining Forex trading. This guide https://www.alpari.org/education/forex-trading-for-beginners allows you to begin Forex trading if you are a beginner.

What Are Currency Pairs?
A currency pair is the quotation of two different currencies, with the value of one currency being quoted against the other. The new investor or trader needs to understand that, the first listed currency of a currency pair is called the base currency, and the second currency is called the quote one. Currency pairs compare the value of one currency to another (the base currency to the quote currency).

It indicates how much the quote currency is needed to purchase one unit of the base currency. The trader should note, the currencies are identified by an ISO currency code: three-letter alphabetic codes that represent the various currencies used throughout the world and when combined in pairs they make up symbols cross rates used in currency trading. The code simply associated with the international finance market. Below are keynotes a new trader/investor should take note:

1. A currency pair is a price quote of the exchange rate for two different currencies traded in Forex markets.

2. When an order is placed for a currency pair, the base currency is bought while the quote currency is sold.

3. The EUR/USD currency pair is considered the most liquid currency pair in the world. The USD/JPY is also among the most popular currency pairs in the world.

How Does Forex Trading Work?
To trade Forex is to buy and sell currencies, intending to make a profit. Forex trading will always involve two currencies at a time, the base currency and the quote currency the difference in price is where one will make profit or loss. Just like stocks, Forex traders can speculate on fluctuating values of currencies between two countries and its done for entertainment and profit.

The Forex Market for Beginners
The goal for new traders should be to survive long enough to understand the inner working of foreign exchange trading by understanding the terminologies and learning trading strategies.
Some terminologies are:

1. Position: A trade in which currency is in progress. In trading, one encounters either long positions and short positions.
Long position: this is when the trader has bought currency with the expectation that it will increase. Once the currency is sold back the long position is considered closed.

Short position: this is when the trader has sold a currency with the expectation that it will decrease. Once the currency is bought back, the short position is considered closed.

2. Exotic pairs: the currencies that come from smaller economies and the emerging markets. They are usually paired up with a major currency because these offer the least amount of liquidity and the highest volatility of the three brackets, they are regarded as the riskiest trade.

In Forex trading, the various combinations of currency pairs have developed their nicknames, of which some are self-explanatory and some have historical relevance. Examples such as EUR/USD “Fiber” and USD/JPY “Gopher”.

Beginners and any other trader should understand that any kind of trading has its risks and that it's important to keep in mind, however, it can also create profits which is why so many people are involved in it. Trading can be easy but it can also be complicated and requires patience.

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