are different markets in forex such as the spot market, forward market,
and futures market. The spot market trades on the current values of
currencies. In the forward market the traders agree
on a specific exchange rate and the transaction date for the trade.
It will disregard whatever exchange rate might be on the specific transaction
date. In the futures market, buyers and sellers trade on future
contracts, which are contracts to buy a specific commodity or financial
instrument at a specified price with the delivery set in the future.
forex, currencies are assigned a three-letter code: US dollar is
USD, euro is EUR and Japanese yen is JPY. The currency rates are composed
of 6 letter words and as a tradition it is the more expensive currency
that appears first. So USDJPY is the amount of Japanese yen per US dollar, and USDJPY = 89.82 means that 89.82 Japanese yen is equivalent to 1 US
how can you make money on the foreign exchange market? Consider this scenario. In every currency exchange there is a chart which shows the bid price
and ask price. For example, suppose the USDJPY has a bid price of 89, which
means that you can sell your 1 US dollar for 89 Japanese yen, and an
ask price of 90, which means that you can buy 1 US dollar for 90 Japanese
yen. Now let's say you bought 1,000 USD, which will cost you 90,000
yen. Later on the bid price of USDJPY becomes 93 and its ask price becomes 94, so you sell your 1,000 USD and get 93,000 Japanese yen, thus giving you a total earnings of 3,000 Japanese yen.
Of course you could earn a lot if you become good with speculating the ups and downs
of the exchange rates of your currencies, so learn all you can and if possible, experiment with a demo account before you begin trading.