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Unlike many other markets, the forex market is based very much on the simple law of supply and demand. If there is a demand for a currency then its price will rise and if there is an excess in the supply of a currency then its price will fall. However, although the market operates on this fairly simple principle it is still not all that easy to predict movements in the market.

There are two principle methods used to predict currency prices of which the first is fundamental analysis (which was the main method used until the mid 1980s) and technical analysis (which has grown in popularity in recent years with the advent of computer technology to provide the necessary analytical tools). However, whichever method you choose to follow, it is vitally important to learn the skill of prediction before you start trading with real money and that means making sure that your broker provides you with adequate access to simulated forex trading until you have found your feet.