Market times and Trading sessions

The forex market is not traded in a centralized location.  It is traded between banks 24 hours a day however  different currency pairs are traded at different times.  These times are called trading sessions.  These sessions are listed below

Profiting from the Forex market

Profiting from the forex market is done in exactly the same way as the stock market; you buy a currency who’s value you believe will go up and then sell it at a higher price once it does.  Each set of buy and sell transactions is called a “position”. For example if EURUSD is trading at 1.6 (i.e. you can exchange 1 Euro for 1.6 dollars) but you believe it will go to 1.7 you would buy Euros by BUYING EURUSD (since the first currency is the base currency it is the basis of what is being traded).  If you bought 10,000 Euros at a price of $1.6 each ($16,000) then sold them at $1.7 each, you would make $1,000. (This kind of trade is called  a BUY position or going long)

Since every forex trade is 2-sided involving a buy and sell, it doesn’t matter which comes first and so you can also profit if you think the price will go down and SELL first and BUY later (AKA a SELL position or going short).

Earning or Paying interest - Rollover

Whenever you have an open trade you have borrowed currency to buy another and as a result you will earn on the bought currency and pay interest on the borrowed.  Depending on the difference in the rates you will earn or pay interest.  This is usually paid on a daily basis at a cut off time designated by your broker.  This paying or earning of interest is known Rollover.

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