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. There is no centralized location for trading as there is learn more in other forms of stocks and trading because all of the transactions are done online. 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 occurs around the clock over the telephone and on computer terminals at thousands of locations around the world. Foreign Exchange or (FOREX) is also the world's largest trade market. Daily market turnover has skyrocketed from approximately 5 billion USD in 1977, to a staggering 2.5 trillion (and more) US dollars today. This is more than 100 times the daily turnover of the NASDAQ (what's that worth to you). The majority of foreign exchange transactions are spot deals between the US Dollar and six major currencies: the Japanese Yen (JPY), Euro, British Pound (GBP), Swiss Franc (CHF), Canadian Dollar, and Australian Dollar. However, the FOREX Market is so vast and has so many participants that no one player, including governments, can control the FOREX Market or have any influence on its direction. 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. Foreign exchange (FOREX) is the trading of contracts of currency pair exchange rates. This is a "contract", or agreement (FOREX DEALS), that does not involve any physical exchange of currency. 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. The actual change to the Forex trader’s investment (the MARGIN deposited) will be the nominal exchange rate change multiplied by MARGIN ratio. This is an example of a FOREX Day-Trading deal made to buy EUR 100,000 against USD at 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. 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. 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.

2. 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.