Forex, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. FXCM provides foreign exchange for the purpose of investor speculation. The investor wishes to purchase or sell one currency for another with the hope of making a profit when the value of the currencies changes in favour of the investor, whether from market news or events that take place in the world. This market of exchange has has more daily volume, both buyers and sellers, than any other in the world. Taking place in the major financial institutions across the globe, the forex market is open 24-hours a day.

In this market you may buy or sell currencies. The objective is to earn a profit from your position. Currencies are quoted in pairs. The first listed currency is known as the base currency, while the second is called the counter or quote currency. In the wholesale market, currencies are quoted using five significant numbers, with the last placeholder called a point or a pip.

Like all financial products, FX quotes include a "bid" and "ask". By quoting both the bid and ask in real time, FXCM ensures that traders always receive a fair price on all transactions. As in any traded instrument, there is an immediate cost in establishing a position.
The margin deposit is not a down payment on a purchase of equity, as many perceive margins to be in the stock markets. Rather, the margin is a performance bond, or good faith deposit, to ensure against trading losses. The margin requirement allows traders to hold a position much larger than the account value.

For positions open at 5pm EST, there is a daily rollover interest rate that a trader either pays or earns, depending on your established margin and position in the market. If you do not want to earn or pay interest on your positions, simply make sure it is closed at 5pm EST, the established end of the market day.

The forex market is one of the most popular markets for speculation due to its enormous size, liquidity, and tendency for currencies to move in strong trends. An enticing aspect of trading currencies is the high degree of leverage available.

Learning Forex trading in seven steps:

1. Maximise your tools:
FXCM provides multiple tools to help you become a better currency trader including free market news, and real time charts. The most valuable tool, however, is the FXCM Demo account, which allows you to test out strategies and learn from your mistakes without risking real money.

2.Risk Managament:
Every successful trader should know how much risk he is willing to take, and what profits should result from the trade. This is the basis of every realistic trading strategy.

3. Two ways to Trade:
There are two types of traders, technical and fundamental. Both have a radically different approach to making trading decisions.

4.The Basics of Technical Analysis:
All technical analysis starts with a few basic building blocks. With these as a foundation, you can start to make sound trading decisions.

5. Applying Technical Ananlysis:
FXCM provides tools for basic technical analysis. Currency charts can be used on an intraday basis (5-minute, 15 minute), hourly, weekly, or monthly basis. The chart you study depends on how long you plan on holding a position. If you are trading with a few hours in mind you may want to look at 5-minute or 15-minute charts. If you plan on holding a position for a couple of days, you may want to look at an hourly, 4-hour or daily chart. Weekly charts and monthly charts compress price movements to allow for much longer-range trend analysis. Therefore, these currency charts give the technical trader a longer-term context in which to conduct trades.

6. Fundamentals everyone should know:
All Traders should understand why economic releases, interest rates, and international trade are important to movements in the currency market.

7. Pshcology of trading:
The biggest enemy to most traders is not the market, but themselves. Learn basic trading principals that will help you to avoid the mistakes that traders make.

Trading platform:
The prices on the FX Trading Station are not indications of where the market is trading, but actual prices at which a trader can buy or sell the currency pair. In an over the counter market where traders must rely on the financial strength, stability and integrity of their dealer to fulfill the obligations on their forex transactions, size does matter. Size and sophistication dictate a market maker's access to Interbank prices. There is NEVER a discrepancy between the displayed price and the trade execution price regardless of trade size, time of day, or market conditions. This "price guarantee" is especially impressive when compared to the uncertain execution of the futures and equities markets, and is one of the major advantages FXCM provides to the active trader. FXCM offers a firm "no slippage" policy on all stop and limit orders -- meaning your stop and limit orders will be filled at exactly the rate you enter. Ultimately, The quality and reliability of execution at FXCM attracts individual traders as well as money managers, hedge funds and large institutions.

Forex Trading strategy:
To become a successful trader it requires time, market knowledge and market understanding and a large amount of self restraint. Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off.