The foreign currency exchange market has no central exchanges like the stock market and little regulatory oversight. With this beginner’s guide, learn the trading basics.
Step 1: Know common forex terms
Know common forex terms. “Currency pair” compares prices between two currencies. “Ask” is a currency buy price quote. “Bid” is a currency sell price.
A “bid/ask spread” is the point difference between the bid and ask prices of paired currencies.
Step 2: Know common currency letter symbols
Know common currency letter symbols. “USD” is the United States dollar, “CAD” is the Canadian dollar, “GBP” is the English pound, and “JPY” is the Japanese yen.
Step 3: Visit the National Futures Association website
Visit the National Futures Association website and take their Forex Online Learning Program for an easy-to-understand overview of foreign currency trading.
Step 4: Verify if forex dealers are NFA registered
Verify if a forex dealer is registered with the NFA’s Background Affiliation Status Information Center before you trade.
Step 5: Sign up for a free forex trading demo account
Sign up for a 30-day free no-risk forex demo account at an online dealer. Demos can include trade simulation software, news feeds, and analyst trade strategy advice.
Did You Know?
The largest currency denomination that the U.S. Treasury ever printed was a $100,000 bill in 1934.