The large majority of people have some degree of knowledge about equities markets, more commonly known as stock markets, but knowledge of forex markets is relatively uncommon. If you are just getting started in forex trading, then it would be useful to know the major differences between trading in forex and trading in stocks, so that you do not confuse the two. This is important because trading in the two markets is very different, and what works in one could result in large losses in the other.

Starting with the basics, forex trading is buying and selling currencies from different countries with the aim of making a profit when there are changes in the prices of the various currencies. You might, for example, buy Euro using US dollars, and later buy US dollars using Euro. That is an example of a very simple forex trade, and there are a great many more complex variations.


Making a profit in forex trading depends on the foreign exchange rate. The foreign exchange rate is simply the rate at which you can change one currency into another. The exchange rate between any two currencies is constantly fluctuating, making it more expensive to change one currency into another at certain times as compared to other times. Using the previous example, in order to make a profit trading in US dollars and the Euro, you would want to purchase the Euro using US dollars when you are able to get as much Euro for your US dollars as possible. Later, when the exchange rate shifts, you should purchase US dollars using Euro when you can end up with more US dollars than you first started with. This will mean that you have made a profit through forex trading.

Forex trades have to be made through an entity that brokers forex trades. Trading of any sort usually requires that you make your trades through a broker, and you might find a specialist broker that brokers forex trades or one that brokers both forex and stock trades. Any organization that brokers forex trades is usually referred to as a forex broker. The organization that you choose that brokers forex trades for you will be extremely important. This is because the world of forex trading moves at a rapid pace, and having an incompetent brokers who brokers forex trades for you could result in you losing a great deal of money.

It is therefore important to do adequate research before you choose a forex broker, as you have to make sure that you choose one that will execute your trades in a timely and accurate manner. There are a great many forums and other websites where people relate their experiences with particularly brokers, and you can use these to help you avoid the bad brokers. One of the most important things when it comes to forex trading is that you have to be able to trust the company that brokers forex trades for you. If you do not trust that company, then you will not be able to trade with peace of mind, and will most likely not make the best decisions.