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What Is Forex? Quick tips Into the Realm of Currencies


Why don't we begin! What is Forex?

Forex is an acronym for Foreign currency. The foreign exchange is really a currency market where currencies are traded. It represents the largest financial market in the world with daily trading volume exceeding $4 trillion. Just to compare, other real estate markets for example equities at $50 billion daily trading volume, and also the futures market at $30 billion in daily volume you can start to realize the size of the animal and most importantly the infinite trading opportunities that lie before you decide to!

The Forex market is really a 24 hour market running from Monday morning in Tokyo to Friday evening in Ny - non-stop action around the world! This differs vastly from the other real estate markets (like stock markets and commodities exchanges) which open at the outset of and close after their trading day. They are directly tied to time zone they are by which means they are much harder to trade. So for example, for somebody residing in Australia, if they desired to trade the US stock market they would have to be up through the night to do so because of the time difference. You will have no such problems in Forex! You can trade at any time, anytime you like. Obviously, the best times to trade are when the biggest financial markets are open - that's the US and European markets - because the biggest players are out to play and liquidity reaches its highest.

forex trading basics

The players that come into this market vary significantly, its probably the only marketplace and you'll discover traders with $500 accounts trading against big players (and winning!) for example hedge funds, large banks, corporations and governments!

So I get what Forex is, but explain Forex Trading!

Essentially, Forex Trading means exchanging once currency with another, for a period of time, for any profit. Within this business (yes it is a business) you're basically speculating that, for several reasons, you expect that the currency goes down or up with regards to another currency and you're prepared to bet some your capital to profit from that idea. For instance, you may expect the Euro to increase from the US Dollar, so you buy Euro's then sell US Dollars. When the Euro actually rises, you can sell the Euro's, buy US Dollars and take your profit.

Fundamental economic news and political situations play an important role in the fluctuation in value of a currency for just about any given country. I'll be starting much more detail about this within the Fundamental vs Technical trading article which you'll be posting in this series!

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