Forex trading can be very risky and is not appropriate for all investors. Simply explained, in order to weaken its currency, a country sells its own currency and buys foreign currency – usually U.S. dollars. Following the laws of supply and demand, the result is that the manipulating country reduces the demand for its own currency while increasing the demand for foreign currencies. If you plan on meeting those requirements, then you have a decent shot at being profitable as a forex trader.
- While many currencies are typically quoted against the U.S. dollar , there are no required uniform quoting conventions in the forex market.
- As a result, unexpected or large changes can affect the health of nations’ markets and financial systems.