Let’s understand what FOREX and Trading mean individually and then combine them in order to express “trading in FOREX market”:
Trading can be explained as basically buying and selling different financial instruments. As a trader you are willing to gain profit by buying and selling various commodities.
Trading deals with probabilities and nothing to do with certainty. For this reason, there is always the possibility of loss and a trader can never take himself under guarantee. You buy (buying in other terms “going long”) a product whose price is x and keep it. Your reason for doing this action is your belief for the market that you have bought the product will start to increase. If this happens; you will profit by selling the product at y price which you bought at x price.
This thesis is applicable to many markets where FOREX is one of largest among all of the markets.
We call “going short” for gaining profit from the sale. When we “short” (sell) the market, we enter into an agreement with another party. We say that we will sell them at the current price, some time in the future. In this agreement the buyers think that the market will increase so that they will gain profit. However the sellers believe that the market will decrease so that they will gain profit.
FOREX refers to all of the international markets where foreign exchange is traded, using the exchange rate between the currency of one country and the currency of another country.
The FOREX market is one of the largest markets in the world that offers its investors the opportunity to make leveraged transactions (that is, a system implemented by brokerage houses that allows its customers to trade above the investment amount).
In this market, besides the currencies of different countries, products such as gold, silver, coffee, wheat etc. are processed.
FOREX market avoids risks by fixing a rate at which the transaction can be completed. Speculating means ability to buy or sell different currencies at the same time and gaining profit due to the increase or decrease of those currencies.
Considering that central banks around the world make transfers for 2-3 trillion dollars daily hence none of a single central bank is capable of moving this market even for a moment.
While trading at the FOREX market, traders invest a small amount of their belongings in order to hold large positions. As a result; it is possible to say that trading currencies are not closely relevant to the micro economy.