Forex
What is Forex?
The Foreign Exchange market, also referred to as the "Forex" or "FX" or "Spot FX" is the largest financial market in the world, with a volume of about $2 trillion a day.
What is traded on the Foreign Exchange?
The simple answer is money. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs.
Unlike other financial markets like the New York Stock Exchange, the Forex spot market does not have a physical location and is run electronically, continuously over a 24-hour period.
Forex was originally intended to be used by bankers and large institutions. However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to individuals interested in making money and trading in the Foreign exchange market.
All you need to get started is a computer, an Internet connection and information to help you succeed.
Benefits - Trading On The Forex Market
Traders around the world are starting to see the Forex market as an investment opportunity and this has increased the popularity of this form of investment in the last several years.
Liquidity
The Forex market is the most liquid financial market in the world. Traders can open
and close transactions with ease.
24 Hour Market
This is one of the greatest benefits of trading on the Forex market. The market is
open 24 hours a day. The market opens on Sunday at 3:00 p.m. EST when Tokyo market begins to trade and closes
on Friday at 5:00 p.m. EST when the New York markets close.
Leverage
Leverage gives the trader the ability to make a nice profit while keeping risk capital to
a minimum. Some of the Forex brokers offer leverage up to 400:1, which means that a $100 margin deposit would let
a trader buy or sell $40,000 worth of currencies. This high degree of leverage can lead to large losses as well as
large gains without proper risk management.
Low Transaction Costs
Normally the only cost traders will have in any transaction is the spread, that is
the difference between the buy and sell price of each currency pair. This spread could be as low as 1 pip (which
is the minimum trading increment in any currency pair.)
Low Minimum Investment
Entering into the Forex market requires less capital to start trading than any other
market. You could start with an initial investment as low as $300.00, depending on the broker that you choose. This
makes the Forex market attractive to the average individual who doesn't have a lot of start-up trading capital.
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