Online Forex Trading | FX Trading Explained

Online forex trading has become increasingly popular over recent years, and foreign exchange is now one of the largest and most liquid financial markets in the world.

Forex trading explained

Foreign exchange trading – often known as forex or FX trading – enables you to utilise your skills in anticipating currency market movements. When you predict that one currency will either rise or fall in value against another currency, you effectively purchase one currency while simultaneously selling the other.

Online forex trading pairs

Major forex pairs include euro against US dollar, pound against US dollar, Australian dollar against US dollar, euro against British pound and US dollar against Japanese yen. These are represented as EUR/USD, GBP/USD, AUD/USD, EUR/GBP and USD/JPY.

An example of a forex trade would be to buy sterling (GBP), while selling the US dollar (USD). This is an example of placing a 'buy' trade on the forex pair GBP/USD.

Once you have decided to make your online forex trade, there are two types of exchange-traded forex markets to choose from. These are known as Spot and Forward. Spot forex trades are intended for short-term trading, while Forward forex trades enable you to take a longer-term position. See one of our practical forex examples.

Keep abreast of the factors which influence currency movements with our twice-daily Forex Focus reports. Each update includes performance charts with accompanying analyses of three topical currency pairs. We also offer a Forex Seminar, where you can find FX trading explained in more detail.