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What's Forex? A Quick Guide Into the World of Currencies



So let's get started! What is Forex?

Forex is short for for FOReign EXchange. The foreign currency is really 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 real estate markets such as equities at $50 billion daily trading volume, and also the futures market at $30 billion in daily volume you can begin to realize how big the animal and more importantly the infinite trading opportunities that lie before you decide to!

The Forex market is a 24 hour market running from Monday morning in Tokyo to Friday evening in New York - non-stop action across the globe! This can be different vastly in the other financial markets (like stock markets and commodities exchanges) which open at the beginning of and close after their trading day. They are directly associated with time zone that they're in which makes them much harder to trade. So for instance, for somebody living in Australia, when they wanted to trade the united states stock market they'd need to be up all night to do so due to the time difference. You will have no such problems in Forex! You can trade anytime, anytime you like. Obviously, the very best times to trade are when the biggest financial markets are open - that's the US and European markets - because the biggest players are to play and liquidity is at its highest.

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The players which 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 currency 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 anticipate that a currency goes down or up in relation to another currency and you're willing to bet some your capital to learn from that idea. For example, you may expect the Euro to increase against the US Dollar, so you buy Euro's and sell $ $ $ $. Once the Euro actually goes up, marketing the Euro's, buy $ $ $ $ and take your profit.

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