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What's Forex? A Quick Guide In to the Realm of Currencies
Why don't we begin! What's Forex?
Forex is short for 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. Simply to compare, other real estate markets for example equities at $50 billion daily trading volume, and the futures market at $30 billion in daily volume you can begin to understand the size of your pet and more importantly the infinite trading opportunities that lie before you decide to!
The Forex market is a Round-the-clock market running from Monday morning in Tokyo to Friday evening in Ny - non-stop action across the globe! This can be different vastly from the other financial markets (like stock markets and commodities exchanges) which open at the outset of and close at the end of their trading day. They are directly tied to time zone that they're by which makes them much harder to trade. So for instance, for somebody residing in Australia, when they wanted to trade the US stock market they'd need to be up through the night to do this because of the time difference. You will have no such problems in Forex! You are able to trade at any time, anytime you like. Obviously, the very best times to trade are once the biggest investing arenas are open - that's the US and European markets - as the biggest players are to play and liquidity reaches its highest.
The players that come into the forex market vary significantly, its probably the only marketplace where you can find traders with $500 accounts trading against big players (and winning!) such as hedge funds, large banks, corporations and governments!
So I recieve what Forex is, but explain Forex Trading!
Essentially, Forex currency trading means exchanging once currency with another, for any time period, for any profit. Within this business (yes it's a business) you're basically speculating that, for a number of reasons, you expect that the currency will go up or down with regards to another currency and you're willing to bet a certain amount of your capital to learn from that idea. For instance, you could expect the Euro to increase against the US Dollar, so you buy Euro's and 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 any given country. I will be going into much more detail about this within the Fundamental vs Technical trading article which you'll be posting in this series!
