Since there is constant fluctuation between the currency values of the various countries due to varying supply and demand factors, such as: interest rates, trade flows, tourism, economic strength, geopolitical risk and so on, an opportunity exists to bet against these changing values by buying or selling one currency against another in the hopes that the currency you buy will gain in strength, or the currency that you sell, will weaken against its counterpart.
Until the advent of the internet, currency trading was really limited to interbank activity on behalf of their clients. Gradually, the banks themselves set up proprietary desks to trade for their own accounts, and this was followed by large multi national corporations, hedge funds and high net worth individuals. With the proliferation of the internet, a retail market aimed at individual traders has sprung up that provides easy access to the foreign exchange markets, either through the banks themselves or brokers making a secondary market.
Just like stocks, you can trade currency based on what you think its value is or where it is headed. But the big difference with forex is that you can trade up or down just as easily. If you think a currency will increase in value, you can buy it. If you think it will decrease, you can sell it. The retail forex trading industry is growing everyday with the advent of forex trading platforms and their ease of accessibility on the internet. Retail forex traders access the market indirectly either through a broker or a bank.
In order to start trading forex, you will need to trade with the help of a forex broker. There are many forex brokers out there today who allow you to open a forex trading account for as little as $5. The forex broker is the one who facilitates your buy and sell orders and also allows you to research into the markets (also known as technical or fundamental analysis) to help you make more informed decisions… and of course allows you deposit more funds or withdraw your profits when you want to.
If you ever ask your self if you can trade in the forex market, by reading this article you probably understood that forex trading is available for everyone who have computer and internet connection. While the forex market is clearly a great market to trade, it is important to note that trading carries both the potential for reward and risk. Many people come into the markets thinking only about the reward and ignoring the risks involved, this is the fastest way to lose all of your trading account money.