Forex is the name for the foreign exchange market. Currencies are traded here 24 hours a day through a floating currency exchange from Sunday at to Friday. It is the biggest financial market in the world. Why trade currencies against each other? If you sell goods to a foreign company, or buy them from an overseas supplier, then a change in the currency could hamper your profits. So people hedge to protect themselves. Since we left the fixed gold standard in 1973, currencies are allowed to freely float.

To trade the Forex successfully one must decide which currency is going up or down and in what time period. It has continuous liquidity, is very volatile and trending and can have leverage. The US dollar/Euro and the US dollar/yen are the most commonly traded by professionals with the British pound sterling and Swiss franc next. One can trade pairs or each currency separately. There are ETFs to go long most currencies of the major currencies. This may be the safest way for the novice to trade. If you make a mistake and buy the euro long and it goes against you, then you can hold the position. One can trade the currency, futures or options. These are more risky.

These are not markets for the beginner to play in. Money in large amounts can be lost quickly. To trade, one must practice paper trading before trading real money. You must study and research what moves the currency markets. There are currency wars that affect trade. The Treasury and government say they support a strong dollar. Not true. A weak dollar allows US goods to sell overseas more cheaply and foreign goods are more expensive here. Look at the yen and euro over the recent years. Recently, the US dollar moved with gold. Previously it moved in opposite directions. Because the world governments are all printing money, currencies are not devalued and inflation is not observed. Rather, value of each currency against gold is lessened. The euro decreased and the dollar increased. In actuality, the other currencies around the world fell in value compared to gold. The dollar fell less. Thus to trade currencies you must understand the theories of trade. What is really happening, not what it looks like? Have a plan and research everything.

If you trade, you need a strategy. First, you must cut your losses. If a trade goes against you get out fast. Don’t let your emotions and ego run a trade. If you lose, ok stop. You won’t win every one. In fact, you don’t need to.

So where are we going currency wise in the future? The US government is printing money like a mad man. When inflations hits, the dollar will fall and other currencies will move against it. With inflation, currencies in commodity countries will become strong. Australia, New Zealand and the Swiss franc are gold related. Mexico and Venezuela are oil based. One needs to look at these sorts of facts to play the currency markets.