What is Forex anyway?

1. The FOREIGN EXCHANGE (FOREX, FX) market is not a "market" in the traditional sense. In fact, it is the closest thing to "a perfect market" from a pure economics perspective. Because all transactions are conducted online, there is no central location where trading takes place as in other forms of stock trading. Copyright (c) 2008 Orlando Thompson The FOREIGN CHANGE (FOREX or Guest Posting) market isn't a "market", in the traditional sense. It is, in fact, the closest thing we have to a "perfect market" when viewed from an economics perspective. There is no centralized location for trading as there is in other forms of stocks and trading. Trading takes place around the clock on computers and telephones in thousands of locations. Foreign Exchange or (FOREX) is also the world's largest trade market. The daily market turnover has soared from 5 billion USD (and even more) in 1977 to staggering 2.5 trillion dollars (and even more) today. This is more than 100 times the check my source daily turnover of the NASDAQ (what's that worth to you). Most foreign exchange activity consists of the spot business between the US dollar and the six major currencies (Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar), but the FOREX market is so large, and is hosting so many participants, that no single player, governments included, can directly control or make any significant influence over the direction of the market. The FOREX market is the most dynamic market in the entire world. Central banks, commercial banks, international corporations, money managers, speculators, and even private individuals - are all involved in FOREX trading everyday. Trading contracts for currency pair exchange rates is Foreign Exchange (FOREX). It is a NON-DELIVERY trade, which means that there is no physical transaction of currencies, but it is rather an agreement, or "contract" (FOREX DEALS), to trade specific volumes of a pair of currencies at an agreed upon rate. For such FOREX deals, a small amount (the COLLATERAL or MARGIN) is all that is required to complete the transaction. If the exchange rate of a currency pair has changed by a certain percentage, then the value invested in the MARGIN will also change. However, it would be a higher proportion. In fact, the actual change onto the Forex trader's investment (the MARGIN they deposited), will be the nominal change occurred to the exchange rate, multiplied by the MARGIN ratio (the leverage). Here is an example: a FOREX DAY-TRADING deal that has been made, for buying EUR 100,000 against USD, on an exchange rate of 1.3500. The MARGIN required for this deal (offered by the FOREX Trading Platform) is of a ratio of around 1:100. The trader only invests USD $100. The exchange rate rose to 1.3620 after a few short hours. This represents an increase of 0.89 %, which is normal on the global Forex markets.

2. However, thanks to the MARGIN ratio (= the LEVERAGE), the trader's investment went up by 89% (since a leverage of 1:100 has been used)!! This can happen within a few hours, or minutes. But the same thing could also happen in the other direction - traders can't lose more than the original MARGIN deposited. Forex traders can choose to buy or sell EUR in the deal. They may make money (if they were right ...)) when EUR falls. Forex trading is available today not only for the MAJOR (the world's leading currencies), but also many other currency pairs, including exotics, gold, silver, etc ...). Don't wait to see if you can make money, but invest today and start making it happen.