what is forex trading and how does it work

what is Forex

 Forex stands for foreign exchange, which involves exchanging your currency for a foreign currency. 

If you live in the United States and have traveled to Mexico, you might have encountered currency exchange kiosks at international airports. 

For instance, when you travel to Mexico, one dollar will currently get you about 20 pesos. If you exchange a hundred dollars, 

you'll end up with 2,000 pesos! Just to give you some context, when I was a kid, the exchange rate was 1 to 10, meaning you could really stretch your dollar in Mexico back then.

Now, let’s talk about the EUR/USD pair—

this is the most commonly traded currency pair. Right now, one euro costs about 1.13 dollars. You might wonder how to make money off this. 

When trading currency pairs, a standard lot is a measure of the amount you’re trading. A standard lot is 100,000 units. So if you want to trade one standard lot of EUR/USD at 1.13, you’ll need $113,000.

If the price moves up by 10 pips (which is a tiny price change), that could mean a profit of $100! You buy at one price and sell at a higher price, and you keep the difference.

 However, it’s crucial to remember that the market can swing the other way, leading to potential losses just as easily. 

That’s why a solid understanding of technical analysis, basic financial fundamentals, and lots of practice is vital for trading successfully.