What Is Forex, Anyway?

1. The FOREIGN CHANGE (FOREX or 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. In fact, it is the closest thing to "a perfect market" from a pure economics perspective. Trading is not centralized as it is with other types of stock trading. Trading occurs around the clock over the telephone and on computer terminals at thousands of locations around the world. Foreign Exchange (FOREX), is the largest market in the world. 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 100 times more than the daily turnover on the NASDAQ. 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. That makes the FOREX market the most exciting market in the 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. The magnitude of such FOREX trades is that, in order to make the deal, only a proportional amount is needed (the COLLATERAL, or the MARGIN). Thus, if the currency pair exchange rate has changed by some percentage, the value of the MARGIN invested would accordingly change, however - in a much higher proportion. The actual change to the Forex trader’s investment (the MARGIN deposited) will be the nominal exchange rate change multiplied by MARGIN ratio. 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. This deal is MARGIN-required by the FOREX Trading Platform. The ratio required for this transaction is around 1:100. The trader only invests USD $100. After a few hours, the exchange rate went up to 1.3620. This represents an increase of 0.89 %, which is normal on the global Forex markets. However, thanks to the MARGIN ratio (= the LEVERAGE), the trader's investment went up by 89% (since a leverage

2. of 1:100 has been used)!! Remember: that can happen in less than a day, sometimes in hours or even minutes! The same could happen in the opposite direction, however - the traders cannot lose more than their original MARGIN deposited (in other words we could say: you can profit unlimited amounts, but you can lose not more than 100% of your original investment, in this case $100). Forex traders can choose to tradingview 2 minute chart buy or sell EUR in the deal. They may make money (if they were right ...)) when EUR falls. The Forex market offers today FOREX trading not only in MAJORS (the leading world curencies) but also in many other currency pairs (including exotic, gold and silver, etc...). Don't wait to see if you can make money, but invest today and start making it happen.