A forex account is an account used to hold and trade foreign currencies. Typically, you open an account, deposit money denominated in your home country currency, and you can buy and sell pairs at will.
The purpose of this, is to hopefully profit from fluctuations in currency values. You would want to try to match up a currency that is appreciating in the value, against one that is decreasing in value. You buy or sell the pair and hold until you think the rise or fall of the pair is over.
A forex account typically fluxuates in value due to open positions, so it tends to increase or decrease in value.
Opening a forex account is similar to opening a bank account. If you have an ID and minimum deposit, you can probably open an account. It typically takes a few days and you have to fill out a questionaire about your intentions due to financial regulations.
A standard for most forex trading accounts is leverage. Forex leverage allows you to make trades on the open forex market using only a fraction of the actual trade amount. For instance, if you wanted to buy 10,000 units of currency, you could typically do that with only 200 units of currency in your account if you were using 50:1 leverage.
The upside to this is that you can make trades larger than amount you have in your account. The downside to this is that you can easily lose a large amount of money if you don't trade carefully and tread lightly.
Forex trading is an interesting venture. It's not one that you should take lightly. In order to make money while trading forex, you need to manage your risk, and keep your emotions in check. There is a lot of sales material out there that will tell you that you can get rich quick and easily trading forex. You'll need to see your way around that attitude in order to actually make some progress and make money.
Forex trading is anything but a get rich quick scheme. In fact, if you try to make money quickly, it's more likely to be a quick way to flush your money down the toilet. Take your time, trade at a slow steady speed and success is possible.
If you've learned anything from this, or have questions, feel free to write me at forextrading@aboutguide.com.