##1. What it Forex? What is Forex Trading?

Before we can understand Forex Trading, what it Forex??
forex is Just an Online Market

Forex also called (foreign exchange market, FX, or currency market) is  an Online Market
where you can Buy or Sell Currencies.
The currency is the money that a particular country uses.


Example

Cindy is in South Africa, she buys a pair of shoes online from Vans Store in United States. The pair of shoes cost $ 20 in USA currency (Dollar) and Cindy buys with South African currency (Rand).
For Cindy to be able to buy the shoes, her money has to be converted to dollars, in forex we say she buys dollars or Dollars are sold to Rands.
Buy and Sell only means one currency is converted to another, this conversion is called Forex (foreign exchange)

Forex happen online between Computerized Bank Accounts. Cindy buys $ 20 shoes through her Capitec Bank. The Computer of Capitec Bank will read Exchange Rates from Forex Computers and know how much Rands are Equivalent to $ 20 and convert the rands into Dollars in order to pay for the shoes. if exchange rates was 1 dollar Equal to 5 rand, Cindy would pay 100 rands to pay for 20 dollar shoes
Calculations: Exchange Rates $1 = R 5
                                                   $ 20 x 5 = R 100

Vans in USA uses FNB bank. Vans receives payment for the shoes in Dollars because the rands are converted.
NB. Again, when rand was being converted to dollar, we say rand is buying dollar, or Dollar is sold to rand. this conversion is called foreign exchange (forex)

Thousands of people and mega companies around the wold buy and sell across countries so currency conversion (forex) happen every second for 24 hours a day. When this buying and selling happen, there are computers that measure supply and demand of currencies then set appropriate Exchange Rates between currencies. If for example, other Countries buy more from USA, this means they buy more USA Dollars to pay for items they buy from USA,  meaning Dollar is demanded more, then Computers will increase Exchange rates to increase price of a Dollar, meaning Dollar becomes more expensive, then Value of USA dollar will go up compared to other countries (also means USA Economy is raising.

Exchange rates change every second. They go up and down

This image shows bars that a computer draws when rates goes up or down. green candles were drawn when Rates were going up, white candles were drawn when rates were going down. Do not worry about understating the bars now.
This fluctuation of Exchange Rate gave birth to the popular Forex Trading we know right now.

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