Forex is actually a shortened version of foreign exchange. This is a market where traders around the world trade one type of currency for others. One common scenario is that an American Forex trader has bought a few thousand yen in the past, but now sees the yen is losing value relative to the dollar. For example, if an investor trades yen for dollars, he’ll earn a profit if the dollar is worth more than the yen.

The forex market is dependent on the economy, even more so than futures trading, options or the stock market. Learn about account deficiencies, trade imbalances, interest rates, fiscal and monetary policies before trading in forex. If you begin your trading without this knowledge, you will be setting yourself up for disaster.

You should never trade based on your feelings. Emotions like greed and anger can make trading situations bad if you allow them …