Forex Trading Basics – Foreign exchange or forex trading involves exchanging one national currency for another. In the forex market, you can trade numerous pairs of currencies that are known as currency pairs. When the U.S. dollar is not involved in a currency pair, it is called a cross currency pair.
Among forex traders, the most actively traded currency pairs are known as the majors and the major crosses. Moderately traded currency pairs are known as minors, while the least actively traded pairs are known as exotics.
In all of the major currency pairs, you can freely go long or short one particular currency against another, although some of the less actively traded national currencies are subject to exchange rate controls. These controls are typically overseen by a central bank that limits the value or fluctuations of their country’s currency relative to one or more other national currencies.
For those sincerely interested in getting started trading forex for their own account, the good news is that the forex market is now wide open to your participation as an online forex trader, even if you only have a few dollars to put at risk.