FOREX or The Foreign Exchange market refers to an international exchange market where simultaneous buying of one currency and selling of another is done. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). It is one of the most unique markets of the world because it is almost free from all the external controls and secondly it has largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day, that is 30 times larger than the combined volume of all U.S. equity markets.
Buying and selling of currencies is basically for two reasons. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.
Marginal trading, which is speculating the currency prices by getting a credit line, used for trading with borrowed capital. It is important because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can
conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital.
The two fundamental strategies in investing in FOREX are Technical Analysis or Fundamental Analysis. Technical analysis is basically studying the past performance of a particular currency and investing in that currency hoping that history would repeat itself. Simply Stating, This technique stems from the assumption that all information about the market and a particular currency's future fluctuations is found in the price chain. That is to say, that all factors that have an effect on the price have already been considered by the market and are thus reflected in the price. A Fundamental Analysis is one that analyzes the current situations in the country of the currency, including such things as its economy, its political situation, and other related rumors. Also, it is important to remember that investors must also keep in mind the expectations and anticipations of market participants and not on the above factors alone.
Some of the benefits of FOREX can be listed are that potential profits are enormous relative to initial capital investments. Another benefit of FOREX is that its size prevents almost all attempts by others to influence the market for their own gain. As compared to investing in Equities or currency futures, FOREX provides 24 hour trading, it has superior liquidity, it has 100:1 Leverage and it provides with lower transaction costs and higher profits.
Pankaj andy writes about forex. Learn more at http://www.forexblog.org .
Currency Trading Tips For Beginners
Currency trading is a platform where individuals speculate on the exchange rate between two currencies. Traders buy and sell currencies hoping to realize a profit. In order to succeed in currency trading you will need a source of accurate and timely...
Forex trading can be like day-trading
Forex trading, or foreign currency trading, has become a bit of a craze of late, especially since it is something available to anyone who owns a computer. And anyone who is willing to put in some training time can profit from forex trading. The...
The Key To Protecting Your Money
Have you ever experienced a major paradigm shift? You know, the
kind where you think you already know something about
But suddenly, you learn something new about that 'something'
that changes your whole perspective and outlook...
To be or not to be a psychological currency trader?
Currency trading, just like other trading fields, involves the
risk of loss. This risk increases because of the trader's
psychological weaknesses. Human features make the difference
between the successful and always loosing investor. Here's...
Welcome To The World Of Forex Trading
You no doubt have a ton of questions and are eager to learn what this popular investment option entails. This site is designed to give you the tools and techniques necessary to make smart investment decisions. Spend a little bit of time reading...
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest / trade in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading.
** The Views and opinions represented in the provided website links and resources are not controlled by the Referring Broker or the FCM. Further, the Referring Broker and the FCM are not responsible for their availability, content, or delivery of services.