Currency Trading - Intro To The Forex Market
Posted by bharat
The Forex market, which is an abbreviation for the Foreign Exchange Market, is a global marketplace where you can trade currencies.
It was established in 1971 after fixed currency exchange was put to an end. Supply and demand now determined the prices of currencies. Throughout the 1970’s, Forex trading became more and more popular. But after the advances in technology made in the 80’s, the Forex market skyrocketed in popularity. In a short amount of time, it grew from an average trading level of $70 billion a day, to $1.5 trillion.
Big Numbers And Long Hours
The Forex market deals with humongous amounts of currency exchanges therefore is open for twenty-four hours a day, and five days a week. Not only does this allow you to trade more, but it allows you to trade at your own convenience. This is yet another advantage Forex trading has over other investments.
Though there are large trading centers in Tokyo, New York, Hong Kong, Singapore, London, Paris, and Frankfurt, there is no specific central location. All the trading transactions are done over the internet or sometimes by telephone.
There are approximately five thousand trading institutions in Forex trading. These institutions are central government banks, international banks, and many different commercial companies and brokers that work with all types of foreign currency exchange.
But even though there are many large-scale trading institutions, the Forex market is still available to a small investor. It has just as much potential for financial gain for one person as it does for a whole company. In the past, there was always a minimum on transaction sizes and traders were forced to meet certain financial regulations. But now with internet trading, anyone can trade and you need only as little as $100 to begin!
Figuring It All Out
“But how does the Forex market function?” you might ask. This is easy to explain. Currencies are traded in pairs - Japanese yen and US dollars, or euros and English pounds. Each transaction is composed of selling one currency then buying another. For instance, if you were sure that the English pound was going to do better than the dollar, you would sell your dollars and buy pounds.
The ability to make money lies in the fact that there is always movement and fluctuations between currencies. Because of the huge amounts of money used in each transaction, you can make great profits from even the slightest rise or fall.
So to sum it all up, I’ll just list a few of the greatest benefits of Forex trading:
1- The Forex market is open 24/5. And you can access it from anywhere as long as you have a computer and internet.
2 - No commission fees. Yes, this sounds too good to be true. But it is! Brokers don’t require commissions. They make their money by setting “spreads” which are much less exacting than pricy commissions.
3 - There’s great liquidity. The Forex market is the largest financial market in the world, so there is guaranteed to be a buyer and seller out there somewhere to trade with.
These are just a few of the many advantages Forex has over other forms of investment. If it sounds too good to be true, just look into it yourself and give it a try.
