In this market you may buy or sell currencies. The objective is to earn a profit from your position. Placing a trade in the foreign exchange market is simple. Trades are performed online or by phone without taking physical delivery of the currencies. In the forex market, currencies are always priced and traded in pairs. You simultaneously buy one currency and sell another, but you can determine which pair of currencies you wish to trade.

Approximately 1% of the value of the positions held in an account for each lot of currency being traded (approximately 100:1 leverage) is what most Market makers/brokers/banks permit you to control. This equates to $1000 per lot (100,000 units). With more buying power, you can increase your total return on investment with less cash outlay. But be careful, trading on margin magnifies your profits and losses.

Currencies trade in fractions of a cent (or a Franc or a Yen, etc.). The smallest fraction is called a "pip". A pip is a measure of currency movement. Each pip has it’s own value, one pip in EUR/USD in the standard account would be $10.00 and in the USD/CAD would be $8.40. The Broker’s Computerized Software will always give the current price per pip for all currencies listed.

Taking a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. Alternatively, a short position is one in which the trader sells a currency and aims to buy the currency back later at a lower price. Buying or selling currencies in response to economic or political events which occur are reactive, whereas buying or selling currencies on anticipated events is speculative. The bulk of currency activity is generated by market participants anticipating the direction of currency prices. In general, the value of a currency versus other currencies is a reflection of the condition of that country's economy with respect to the other major economies.

Disclaimer- Currency trading involves substantial risk of loss, and thus is not suitable for all investors. You should carefully consider your financial situation before opening a trading account, and only risk capital should be used when trading in these markets. In addition, we recommend you consult your financial advisor to help you determine if currency trading is appropriate for you.