Currency Trading Information Channel
FOREX - Where Fortunes Are Made Everyday
The Foreign Exchange Market - better known as FOREX - is a world wide market for buying and selling currencies. It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day and American stock markets exchange about $100 billion a day.
The Foreign Exchange Market was established in 1971 with the abolishment of fixed currency exchanges. Currencies became valued at 'floating' rates determined by supply and demand. The FOREX grew steadily throughout the 1970's, but with the technological advances of the 80's FOREX grew from trading levels of $70 billion a day to the current level of $1.5 trillion.
The FOREX is made up of about 5000 trading institutions such as international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency exchange. There is no centralized location of FOREX - major trading centers are located in New York, Tokyo, London, Hong Kong, Singapore, Paris, and Frankfurt, and all trading is by telephone or over the Internet. Businesses use the market to buy and sell products in other countries, but most of the activity on the FOREX is from currency traders who use it to generate profits from small movements in the market.
Even though there are many huge players in FOREX, it is accessible to the small investor thanks to recent changes in the regulations. Previously, there was a minimum transaction size and traders were required to meet strict financial requirements. With the advent of Internet trading, regulations have been changed to allow large interbank units to be broken down into smaller lots. Each lot is worth about $100,000 and is accessible to the individual investor through 'leverage' - loans extended for trading. Typically, lots can be controlled with a leverage of 100:1 meaning that US$1,000 will allow you to control a $100,000 currency exchange.
There are many advantages to trading in FOREX.
· Liquidity - Because of the size of the Foreign Exchange Market, investments are extremely liquid. International banks are continuously providing bid and ask offers and the high number of transactions each day means there is always a buyer or a seller for any currency.
· Accessibility - The market is open 24 hours a day, 5 days a week. The market opens Monday morning Australian time and closes Friday afternoon New York time. Trades can be done on the Internet from your home or office.
· Open Market - Currency fluctuations are usually caused by changes in national economies. News about these changes is accessible to everyone at the same time - there can be no 'insider trading' in FOREX.
· No commission - Brokers earn money by setting a 'spread' - the difference between what a currency can be bought at and what it can be sold at.
How does it work?
Currencies are always traded in pairs - the US dollar against the Japanese yen, or the English pound against the euro. Every transaction involves selling one currency and buying another, so if an investor believes the euro will gain against the dollar, he will sell dollars and buy euros.
The potential for profit exists because there is always movement between currencies. Even small changes can result in substantial profits because of the large amount of money involved in each transaction. At the same time, it can be a relatively safe market for the individual investor. There are safeguards built in to protect both the broker and the investor and a number of software tools exist to minimize loss.
Copyright 2005. William McNutt. All rights reserved
This article may be freely distributed and reprinted as long as the author's information and web link are included at the bottom of the article.
Bill McNutt is a retired Areospace Engineer. Retirement got boring so he took up web page building. He spends most of his time working on websites and writing articles.
MORE RESOURCES updated Wed. November / 20 / 2019
How To Start Out In Forex Trading Latin Post
Why are forex trading signals important? ForexLive
Currency trading floors seem to have glass ceilings for women looking to move into management - The National
Currency trading floors seem to have glass ceilings for women looking to move into management The National
Central bank trades prompted rival FX traders to share info Financial Times
Medical student says Forex trading will make him a millionaire at 21 Herald Publicist
How Forex Signals Make Trading Process Easier CIO Applications
Benefits of Using Windows VPS in Forex Trading TheBull.com.au
How to Make Money on the Forex Market BBN Times
USDCAD extends to new session highs ForexLive
Dollar Extend Slide on Trump-Powell Meeting, Risk Unperturbed by Currency, Trade War Risks - DailyFX
Govt urged to embrace online forex trading The Zimbabwe Standard
When robots meet humans in forex trading Born2Invest
Top 5 Reasons Why You Should Start Forex Trading Business Review
Eight key terms you need to know before getting into forex trading Standard Digital
Ebury nabs £350M for foreign exchange and currency services for SMEs, Santander takes 50.1% stake - TechCrunch
Ebury nabs £350M for foreign exchange and currency services for SMEs, Santander takes 50.1% stake TechCrunch
AUD/JPY getting hit again as China threatens to retaliate against the US over Hong Kong bill - ForexLive
AUD/JPY getting hit again as China threatens to retaliate against the US over Hong Kong bill ForexLive
How does Trading Forex With Bitcoin Work? CryptoTicker
Ion Group buys currency software supplier MarketFactory Financial Times
NZD/JPY 4H Chart: Moving Towards Target Action Forex
AUD/USD Decline To Continue Action Forex
Drying up dollars drive global currency trading dependence Prothom Alo English
Forexlive America's FX news wrap: S&P index trades up to all time high (almost... so close) but stalls - ForexLive
Forexlive America's FX news wrap: S&P index trades up to all time high (almost... so close) but stalls ForexLive
Forex Trading: How To Get Started Without Losing Your Shirt 2oceansvibe News
NZD/USD Tests 50-Hour SMA Action Forex
Financials, healthcare lead broad-based losses The Sydney Morning Herald
The Japan Virtual Currency Exchange Association Joins the International Digital Asset Exchange Association - Crowdfund Insider
The Japan Virtual Currency Exchange Association Joins the International Digital Asset Exchange Association Crowdfund Insider
US-Sino Trade Negotiations Turn Nasty DailyForex.com
4 Forex Trading Tips for Beginners FXDailyReport.com
Mid-Day Update: Trade optimism bubble, Oil rallies on a somewhat bullish EIA report, Gold hovers, Bitcoin remains vulnerable - MarketPulse
Mid-Day Update: Trade optimism bubble, Oil rallies on a somewhat bullish EIA report, Gold hovers, Bitcoin remains vulnerable MarketPulse
Forex Regulation in Australia DailyForex.com
Trading Support and Resistance DailyForex.com
Forex Trading for Beginners Yahoo Finance
NEO price prediction: is NEO worth trading? Capital.com
Travelex Currency Exchange & Payments Malaysia leverages on its Asian regional hub shared services to commemorate Visit Malaysia Year 2020 - Yahoo Finance
Travelex Currency Exchange & Payments Malaysia leverages on its Asian regional hub shared services to commemorate Visit Malaysia Year 2020 Yahoo Finance
US Stock Index futures about flat ForexLive
Currency Market Do Not Share Trade Optimism Action Forex
USD/JPY Forex Signal DailyForex.com