In the Foreign Exchange (FX) market, what you are doing is buying and selling currencies
. There is not an actual transfer of goods or even money for that matter. If you have ever traded in the stock market before you will not have any trouble with FX because there are some similarities between the two.
If you do some research and have some insight on the market making money in the Forex market can be pretty easy however it is important to do your homework on what you are trading! When you buy and exchange currencies you are obviously expecting the prices to change. Your object is to have the currency that you bought increase in value compared the one you are selling. That is how you make money in Forex. It sounds simple but the problem is that the market is not always predictable.
When choosing currencies to trade they are always listed in pairs. The exchange rate is the ratio of the value of one currency compared to another. When you are reading a Forex quote the currency that comes before the "slash" is called the base currency. The second currency is called the quote or counter currency. What the exchange rate tells you is how much you have to pay in units of the quote currency to buy one unit of the base currency.
You base your buying or selling of pairs off the base currency. Buying or selling the pair depends on what you think the base currency is going to do compared to the quote currency. If you think the base currency will go up relative to the quote currency then you would buy the pair. If you think the base currency is going to go down compared to the quote currency then you would sell the pair.
The Forex market can be a good way to make money. If you don't feel comfortable, some online trading platforms offer a demo account so you can get a feel for the market before you jump right in.