Most of you must have often heard the term Forex or Fx. Forex is nothing but foreign exchange or international currency exchange. Simply speaking, if you are an American, then British Sterling Pound or European Euro or any other currency is a foreign exchange for you.

Huge amounts of Forex change hands in the global trade and commerce. Besides the international business transactions, forex has also established a firm foothold in the investment portfolio of large number of people. You may wonder how you can invest in forex. Is it like investment in stocks and bonds? Is it suitable to a layman like me? Well, according to me it is neither easy nor difficult. You must give it a try, provided you are willing to learn forex trading.

Let me tell you one astounding feature of forex markets. Rates of international currencies fluctuate tremendously depending upon the country specific factors. To realize the true potential of how the vast scale fluctuation or volatility in the forex rates can help you in reaping huge benefits, you must partake in online forex trading.

Let me first brief you on the Advantages of Forex Trading:

• Liquidity: Global forex trading witnesses a daily turn over of few trillion US dollars.
• Market Availability: Forex trading is a round the clock market place. Forex market wakes up with Sidney, moving around globally as each market comes to life. Tokyo wakes up next, then London and finally US.
• Low Trading Costs: Like all the other markets, forex trading requires an intermediary called as a forex broker. However unlike other markets, the forex trading brokers do not charge any commissions for executing your trade. On the contrary the forex trading brokers make a small profit from bid/ask spread on the currency pair.
• Small Capital and High Leverage: You do not need to deploy huge capital amounts as the exposure or leverage ratios are high of the order of 200:1. Most of the forex brokers allow you to start with a capital as low as 100 USD.

You must keep in mind that in your zeal to make fast buck you may end up loosing enormous money if you have not understood the intricacies of trading forex. I would sincerely suggest that you should start your forex trading education in a step by step approach. With the advent of high speed internet, access to forex trading information has become very easy. You can learn about forex currency trading through online or offline forex trading course. I have listed out few topics as under for your guidance.

• What are the Forex pairs, Forex Symbols and how to read and understand forex quotes?
• What are the Margins, Pips, scalping, and bid/ask spread?
• How does online forex trading take place? What is meant by Forex trading platform? What is the role of forex broker and how to choose a right broker?
• How to manage buy/sell orders? How to keep track of profit, loss and current balance?
• What is a fundamental analysis? What is a technical analysis?
• What is meant by Forex charts, Forex signal, and Forex indicators?
• Tips on how to become a successful forex trader.

Before I deliberate on Forex Quotes, let me first update you on forex pairs and forex symbols. Let us not delve further into the history of how the currency pairs have evolved and standardized in the forex trading system.

Forex Symbols: There are seven most active currencies on the forex trading markets, besides number of other currencies that are traded sporadically.

1. US Dollar – USD
2. European currency – EURO
3. Japanese Yen – JPY
4. British Sterling Pound – GBP
5. Swiss Franc – CHF
6. Australian Dollar – AUD
7. Canadian Dollar – CAD

Forex Pairs: The term Forex pair may sound intriguing to those of you who are used to stock trading. Why forex in pairs? Well, even in stock trading, indirectly you are trading a pair. When you buy a stock, you are selling your money and vice versa. Similarly when you are trading forex you are buying once currency and selling the other currency. EURO/USD, USD/JPY, GBP/USD and USD/CHF are the most traded forex pairs that churn out the bulk of the daily trillion dollars turn over in global forex trading.

On any forex trading platform, you will find that almost half of the screen is occupied by flashing figures of forex quotes. Dealing rates is the alternate term often prescribed for forex quotes. Prima-Facie you may feel that it is very easy to read forex quotes. However if you are a novice, you may land up with a buy trade instead of a desired sell trade. I would suggest that you must thoroughly understand how the forex rates are quoted on the forex trading platforms.

Let us study an example of USD/JPY. There are essentially two aspects. The first aspect relates to the exchange rate and the second aspect relates to the forex quote as appearing on the screen of forex trading broker.

• The forex quote USD/JPY = 108.09 is in reality the exchange rate. Here in this quote, the first currency USD is termed as the base currency and the second currency JPY is termed as the quote currency. Thus for buying one unit of the base currency you have to pay 108.09 units of quote currency.
• If you see the forex quote for USD/JPY on the online forex trading software, you will find two separate quotes. USD/JPY Sell =108.07 and USD/JPY Buy=108.10. Offline forex trading brokers will quote USD/JPY = 108.10/108.07. The first price is the bid price and the second price is the ask price. Does it not sound confusing? Well, it is, but till the time you get used to the system. Here is where the concept of bid/ask spread comes into picture.

In the present example, as a part of forex trading, if you wish to buy USD/JPY pair, you will buy at the bid price 108.10. However if you want to sell USD/JPY pair, you will sell at the ask price 108.07. In reality the forex trading broker has sold you USD/JPY pair at 108.10 and bought it at 108.07. The small difference of 0.03 (3 pips) called as bid/ask spread is the profit for the broker who does not levy any additional fees or commissions on the trades executed for you.