What is the Forex
The last several decades have brought about great changes for the forex, or foreign exchange market. During this transition the forex has become one of the world's largest financial markets, with nearly $1.9 trillion US dollars traded daily. Forex is part of the bank to bank currency market known as the 24-hour Interbank market. The Interbank market is open 24 hours a day, 5 days a week and literally follows the opening of the markets world wide through each time zone, moving from the major banking centers of the United States to Australia, New Zealand to Asia, on to Europe then back to the United States.
Until recently, the forex market wasn't for the average trader or individual speculator. With the large minimum transaction sizes and stringent financial requirements, banks, hedge funds, major currency dealers and high net-worth individuals were the principal participants. These groups have been able to take advantage of the many benefits offered by the forex market vs. other markets, includin, in our opinion, fantastic liquidity and the strong trending nature of the world's primary currency exchange rates.
Forex
People trade the forex markets because the traditional barriers that exist in other markets do not restrict the forex traders' ability to make timely trades. The global nature of the forex market place means that forex markets are not centralized on one exchange as apposed to stock markets where traders trade face to face against other traders. Forex trading is conducted by buyers and sellers across an electronic network world wide via the internet.
The global 24 hour 5.5 days a week nature of forex markets means however that it is susceptible to rapid change. Unlike other financial marketplaces, forex investors can react around the clock in real time to the price momentum movements caused by economic, social and political events. This creates the strong trends and volatility that the Forex market is known for.
Generally, the most commonly traded currencies in the Forex markets are those of countries with stable governments, stable banks and low inflation. Most transactions each day are in the major currencies including the United States Dollar, the Japanese Yen, the Euro, UK Sterling, the Swiss Franc and the Canadian and Australian dollars. The currency exchange rates for these and all other currencies are driven by a number of factors and require investors to be armed with a good deal of insight, up to the minute info and an aptitude for crystal-ball gazing. While variables such as the global economy and political climate exert an influence, the main factors tend to be interest rates, inflation and political stability. Money markets are jumpy and this is why governments often trade in the Forex market in order to affect the value of their currencies. By buying up currency or alternatively upping the supply of their currency - in similar fashion to oil producers - governments can raise or lower the price of their currency. This kind of intervention tends to be a short-lived quick fix approach due to the sheer scale of the Forex market. Highly volatile shifts in values simply cannot be sustained in the long term.
What is Forex Trading
Simply stated, each country has its own currency. Currency trading occurs when one country's currency is traded for another country's currency at the prevailing exchange rate. When a stock investors see an opportunity to make money on the stock market they purchase shares or partial ownership in that corporation. When currency traders see an opportunity in a certain country, they purchase that countries money.
- Forex is open 24 hours a day 5.5 days a week
- Forex is the worlds larget market
- 100 to 1 leverage
- Commission free trading
- No restriction on shorting