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What's Forex? A Quick Guide In to the World of Currencies
So let's get started! What is Forex?
Forex is short for for Foreign currency. The foreign exchange is a currencies market where currencies are traded. It represents the largest financial market on the planet with daily trading volume exceeding $4 trillion. Simply to compare, other financial markets such as equities at $50 billion daily trading volume, and also the futures market at $30 billion in daily volume you can start to understand how big the animal and most importantly the infinite trading opportunities that lie before you!
The Forex market is really a Round-the-clock market running from Monday morning in Tokyo to Friday evening in New York - 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 makes them much harder to trade. So for instance, for somebody living in Australia, when they desired to trade the united states stock exchange they'd have to be up all night to do so due to the time difference. You will have no such problems in Forex! You can trade at any time, anytime you like. Obviously, the very best times to trade are once the biggest investing arenas are open - that is the US and European markets - because the biggest players are to play and liquidity is at its highest.
Players which come into this 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 currency trading!
Essentially, Forex currency trading means exchanging once currency with another, for any period of time, for any profit. Within this business (yes it's a business) you're basically speculating that, for a number of reasons, you anticipate that the currency will go down or up with regards to another currency and you're prepared to bet a certain amount of your capital to learn from that idea. For example, you could expect the Euro to go up from the US Dollar, which means you buy Euro's and sell $ $ $ $. Once the Euro actually rises, marketing the Euro's, buy US Dollars and take your profit.
Fundamental economic news and political situations play a huge role in the fluctuation in worth of a currency for any given country. I'll be going into much more detail about this in the Fundamental vs Technical trading article which you will be posting within this series!
