You ask, What Is FOREX or FOREX MARKET?
The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.5 trillion changing hands every day. That is larger than all US equity and Treasury markets combined! Unlike other
financial markets that operate at a centralized location (i.e. stock exchange), the worldwide Forex market has no central location. It is a global electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of national currencies. As a forex trader you will need a computer, internet connection and a forex trading software application.
Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any
time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
As a forex trader you can make your trade around you schedule. Once you have complete you daily obligation you can start up your computer, sign on to your forex trading application and start trading. Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. With advances in technology over the years, however, the Forex market is now available to everybody, from banks to money managers to individual traders trading retail accounts. The time to get involved in this exciting, global market has never been better than now. Start trading today and be apart of the largest financial market on the planet.
The Forex Market is very different than trading currencies on the futures market, and a lot easier, than trading stocks or commodities. Whether you are aware of it or not, you already play a role in the Forex market. The simple fact that you have money in your pocket makes you an investor in currency, particularly in the US Dollar.
If you are holding US Dollars, you have elected not to hold the currencies of other nations. Your purchases of stocks, bonds or other investments, along with money deposited in your bank account, represent investments that rely heavily on the
integrity of the value of their denominated currency ¨the US Dollar. Due to the changing value of the US Dollar and the resulting fluctuations in exchange rates, your investments may change in value. This change could have a postive or negative effect for your overall financial status.
As a forex trader you have the opportunity, to take advantage of the fluctuation in Exchange Rates, using the volatility of the Foreign Exchange market as a way to increase their capital. Here is an example. Lets say you had $1000 US dollars and you
bought Euros when the exchange rate was 1.50 Euros to the dollar. You would then have 1500 Euros. If the value of Euros against the US dollar increased, then you would exchange or sell your Euros for dollars and have more dollars than you started with. That is a simple FX or forex transaction.
Another example.
You might see the following:
EUR/USD last trade 1.5000 - Explaination, One Euro is worth $1.50 to one US dollar.
The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.
The FOREX plays a vital role in the world economy and there will always be a tremendous need for the exchange of currencies. We live in a global world and the FX is here to stay. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist. You ask why? So a country like France can sell products in the United States and be able to receive Euros in exchange for US Dollar.
RISK WARNING: Risks of foreign currency trading is an extremely risky form of investment. This type of investment is only suitable for individuals and institutions capable of handling the potential losses that are associated with forex trading. An
account with an broker allows you to trade foreign currencies on a highly leveraged basis. How high? Up to about 400 times your account equity. The funds in an account that is trading at maximum leverage may be completely lost if the position or positions held in the account experiences even a one percent change or swing in value. Given the possibility of losing individual's entire investment; speculation and serious consideration in the foreign exchange market should only be conducted with risk capital funds. If the capital funds lost, will not significantly affect the investors financial well-being.
Being a forex trader can be a good full or part time job.
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Tracy Lenyk is a real estate analyst and trader. http://www.forex-money-exchange.com
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Word Count Appx. : 808 | Article Views 465 Published 10-01-2009