FX trading is short for Forex trading. Forex is short for Foreign Exchange.
What makes it different than FX investing is that trading is more short-term in nature than investing.
FX trades can last from shorter than a minute to days or even weeks. Those trades that are opened and closed on the same trading day are called FX day trades.
An FX trade can be viewed simply as a complete transaction. Let’s say for instance you are bullish the EURUSD and you then buy the EURUSD. When you sell the EURUSD then you close your transaction and that makes for a complete trade.
FX trading has become very, very popular especially now that high-speed internet connections and market data are more readily available. FX traders look to profit from the many short-term moves within the market. FX investors on the other hand may view these short-term market fluctuations simple as market “noise” (insignificant moves).
Trading these short-term moves can be extremely profitable for those who know what they are doing. There are many of these short-term moves within every major trend as well as when the market moves sideways.
It should be understood that since FX trading involves a higher frequency of transactions that the transaction cost are an important concern. This is why markets must be evaluated because they need to move actively enough to provide enough profit potential for the FX trader.
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