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What Is Forex? Quick tips Into the World of Currencies



Why don't we begin! What's Forex?

Forex is short for for Foreign currency. The foreign currency is really a currency market where currencies are traded. It represents the biggest financial market on the planet with daily trading volume exceeding $4 trillion. Just to compare, other financial 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 how big your pet and more importantly the infinite trading opportunities that lie before you decide to!

The Forex market is really a Round-the-clock market running from Monday morning in Tokyo to Friday evening in Ny - non-stop action across the globe! This differs vastly in the other financial markets (like stock markets and commodities exchanges) which open at the outset of and close after their trading day. They are directly associated with the time zone they are in which makes them more difficult to trade. So for example, for somebody living in Australia, if they wanted to trade the united states stock market they'd need to be up all night to do this because of the time difference. You'll have no such problems in Forex! You can trade at any time, at your convenience. 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 reaches its highest.

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Players which come into the forex 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 time period, for a profit. Within this business (yes it's a business) you're basically speculating that, for a number of reasons, you expect that the currency goes down or up with regards to another currency and you are prepared to bet some your capital to profit from that idea. For instance, you may expect the Euro to increase against the US Dollar, which means you buy Euro's then sell US Dollars. Once the Euro actually rises, marketing the Euro's, buy $ $ $ $ and take your profit.

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