This foreign exchange tutorial will cover the basics that anybody needs to know about the forex market before they start trading, or even before they decide whether or not they want to try forex trading.

There are so many advertisements on TV, magazines and online, all focusing on the huge amounts of money that can be made.

They do not tell you about the risks, or if they do, it is in very fine print. And there are plenty of other things that you need to know before you start any forex training or begin trading on a live account.

First we will cover some of the terminology in this foreign exchange tutorial. Foreign exchange is usually shortened to forex, FX or 4X. The practice of trading on the foreign exchange market is also called currency trading.

It involves buying and selling different currency pairs according to whether you believe that the price of the pair will rise or fall.

Then of course you close the trade with the opposite transaction after a certain time. If the price went your way, you will profit.

It is a little like stock exchange trading except that we are dealing with currencies instead of stocks and that is why we always talk in terms of a pair.

In order to buy one currency you must sell another, so it is always a matter of exchanging one currency for another.

However, you can deal in virtually any currency, at least in theory. You are not limited to trades that involve the currency of your own country.

Of course in practice most traders keep to the most heavily traded currencies, which are those of the major players in the global financial market (not necessarily the biggest countries).

The most traded currency is the US dollar, followed by the euro, Japanese yen, British pound, Swiss franc, Canadian dollar and Australian dollar.

The most traded pair is USD/EUR, the US dollar and the euro. This is the pair that most beginners are recommended to start trading.

To begin trading you need an account with a broker, a broadband internet connection and, of course, some money to invest.

Since the internet opened up the forex market for so many private investors, known as retail traders, it has been possible to trade with smaller and smaller sized accounts. For some micro accounts now you can start with less than $100.

Of course, you will only be able to make small profits with an account this small. Nevertheless, leverage means that it is possible to control large amounts of money in the market (usually 100 times your stake, and sometimes 200 times), so the return on investment can be high.

However, it is important not to be carried away by dreams of riches and overstretch your funds.

Limit your risk and set stop losses to ensure that you do not lose more than a certain amount if a trade goes against you.

The forex market is open 24 hours a day Monday through Friday and this is a big advantage for many people. It means that you can trade outside of normal business hours.

Many people therefore find that foreign exchange trading suits their lifestyle, while stock trading would not.

This is why so many people are attracted to forex trading and seek out a foreign exchange tutorial from sites like ours.

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