Many of the people who successfully trade every day would be hard pushed to properly explain forex to someone who has absolutely no idea about it. People who are not actively trading don't even know in many cases that forex is an acronym made up from the two words, "foreign exchange."

Trading in foreign exchange, or forex, is highly profitable for many. However, where you can position yourself to make huge profits, you usually also position yourself to risk huge losses. It's essentially a gamble, but if you learn the trade properly, and learn to walk before you try to run, then you won't need to explain forex, for forex will explain itself.

The best way to explain forex is to think of a financial market where the commodity is money. It may be European euros, American dollars, British pounds or Japanese yen. It really doesn't matter. Forex trading is conducted by the buying and selling of different currencies at the same time. The trades are conducted in pairs of currencies.

Until not so long ago only the big boys were into forex. There was a very good reason too; you had to have around $10 million just to get a foot in the door! That meant that only banks and big corporations could enjoy the benefits of forex. But in the mid 1990s something happened to change all that.

The Internet started to grow in the 1990s and by the latter part of that decade online forex trading companies started to offer little people the chance to trade at prices that ordinary men and women, retail traders, could afford.

Trying to explain forex by comparing it to other financial markets can be misleading. Unlike the London Stock Exchange, for example, the forex financial market doesn't have a physical base. It is an Interbank market, or Over The Counter (OTC) market spread over a vast network of banks that span the globe. It is open 24 hours a day every day. There's really nothing else quite like it.

Any attempt to explain forex should explain that the various world currencies are always identified by three letters. The first two letters tell you which country is involved, and the last letter tells you what the currency of that country is.

For example, USD means United States Dollar, JPY means Japanese Yen, and EUR is a little different as it refers to the Euro that is the currency of a majority of European countries. These three, in that order, are the three most traded currencies.

There are many websites that explain forex through their tutorials. Most of them are excellent and should be compulsory training for anyone thinking of trying their hand. Jumping straight in is one sure way to lose money, and that could, and probably will be, a lot of money too.

Once you are sure that you have a good grounding, you should open an account with an online currency trader. You should start with a micro account, which can be as low as $250, though it will be best to go higher than this, perhaps £1,000.

You could also open a mini account, but for that you will need several thousand dollars. There is a lot more needed to be said to explain forex properly, but this article will at least give you a basic idea.