FOREX Trading
• What Is
FOREX?
• FOREX
Or Futures?
• FOREX
Or Stocks?
•
FOREX Trading for
Beginners
• FOREX
Terms To Know
•
Preparing for FOREX
Trading
• Is
FOREX Trading Risky?
•
The Philosophy of FOREX
Trading
•
FOREX and Fundamental
Analysis
•
Tools for FOREX Trading
•
Trading Strategies for
FOREX
• Trading Systems
for FOREX
•
Reading and Understanding
FOREX Quotes
•
FOREX Profits and Losses
•
FOREX Technical Analysis
Part 1
•
FOREX Technical Analysis
Part 2
•
FOREX Trading Brokers
• The
FOREX Margin
•
What Are Currency Options?
•
What Are FOREX Signals?
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Online FOREX Trading
What Is FOREX?
FOREX is the Foreign Exchange Market. Unlike the various stock markets, such
as the New York Stock Exchange, FOREX is a world wide market, where traders
buy and sell currencies from around the world. The FOREX market is open five
days each week, for twenty-four hours each day. Each day, there is more than
$1.5 trillion exchanged. To demonstrate how huge this actually is, the United
States stock exchanges only trade about $100 billion per day, and the US
Treasury Bond Market only trades about $300 billion per day.
Established in 1971, the FOREX was once only open to major financial institutions
and large multi-national corporations. During the 1970's, new rules that
governed the FOREX caused the value of currencies to change, based on the
supply and demand of such currencies. During the 1980's, the FOREX grew by
leaps and bounds, going from daily trade values of about $70 billion to it's
current trading value of $1.5 trillion.
More than 5000 institutions make up the FOREX, including International Banks,
Central Government Banks, Commercial Companies, and Brokers. Unlike other
stock markets, such as the New York Stock Exchange, which is located in New
York City, NY, the FOREX has no central headquarters location. There are,
however, trade centers in New York, London, Hong Kong, Paris, Singapore,
Tokyo, and Franfurt. All trading is done either by telephone or the Internet.
While there are many different types of products traded in the FOREX market,
currencies are traded the most. Furthermore, unlike stock markets, you are
not investing in a company when you make a trade. Instead, you are actually
buying currency, at it's current value, and selling it again when the value
of that currency increases. In fact, FOREX traders often make several trades
per day, never holding onto their investment for very long.
There are many huge players in FOREX, but small individual investors are
also welcome. There was once a minimum transaction size required, and traders
had to meet strict requirements, of a financial nature, before they would
be allowed to trade on FOREX. Things have changed.
Today, units can be broken down into smaller lots, with each lot worth $100,000.
Loans, which are referred to as 'leverage' or 'margins' are given to investors
to buy lots. The leverage is typically 100:1, which means that $1000 gives
you control of a $100,000 exchange on FOREX.
The advantages of FOREX are numerous. First, investments are easily liquidated.
There is always a buyer for all currencies. The market is open five days
per week, twenty-four hours per day. Trades can be done by telephone or Internet,
from your home, your office, or even on vacation. The value of currencies
are greatly affected by events that affect national economies, and this type
of news is available to everyone, at all times. Because of this, insider
trading is impossible in FOREX. Finally, the brokerage fees are very low,
because brokers set a spread, and earn their income from the spread, not
from the trade.
On FOREX, currencies are traded in pairs. A pair is two different currencies,
such as USD (US Dollar) and the EURO (European Dollar). You sell one currency
and buy another. Think of it this way: You walk into a store and purchase
a Pie. You are selling your cash for the Pie. In the case of FOREX, however,
you would be selling your cash for cash from another country.
The object, of course, is to trade up. The FOREX market is always changing.
The value of currencies go up, down, and back up again, all based on what
is going on in the world. There are numerous safeguards that protect investors,
but it is wise to learn more about FOREX and how it all works, before you
invest your money.
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