Forex Is Short For Foreign Exchange

Category: Finance, Currency Trading.

The Forex market has been available to individual traders for nearly ten years now. However, now that it's open to individual traders, it's become a hot topic that many new traders are eager to learn more about.

In the past, it was only available to large financial institutions, big companies, such as banks, multi- national corporations and top currency dealers. So what is it? Forex trading is trading in the currencies of the world through the Forex market, which is the largest financial market in the world. Forex is short for foreign exchange. In fact, it generates trillions of dollars of currency exchanges everyday. Though trading starts in Sydney and ends in New York, Forex trading is not centralized in a single location.

In addition, it operates 24 hours a day, seven days a week, making it the most liquid market in the world. This means you can trade in Forex market whenever you wish, regardless of the local time. Trading in Forex requires trades to done in pairs. A big advantage for traders, especially for those in search of optimal liquidity. When you purchase a currency, you sell another currency at the same time. As you can see, each currency is represented by three letters.

The most commonly traded currency pairs in the Forex market are: USD/ GBP, USD/ JPY, USD/ CHF, and GBP/ USD. USD is the United States dollar. JPY is the Japanese yen. GBP is the British pound sterling. CHF is the Swiss franc. For example, USD/ GBP means you used United States dollars to purchase British pound sterlings. The first three letters of a currency pair represent the currency you used for the investment, while the last three letters represent the currency in which you invested.

To get started in the Forex market, you' ll need a computer with a high speed internet connection, a funded Forex account, and a trading system. A broker earns his money off a small commission from your trades. Most individual Forex traders will also use a broker, an individual or company that offers assistance to the trading process. In addition, although he' ll be trading your funded account, all decisions will remain yours, assuming that's your wish. Many experts say that you' ll never really understand how Forex works until you' ve traded in the market. Here's what else a Forex broker can do for you: - Offer you advice regarding real time quotes. - Offer you advice on what to buy or sell based on news feeds. - Trade your funded account basing solely on his or her decision if that's your wish. - Provide you with software data to help you with your trading decisions.

To help you gain this experience without having to risk your money, you can set up a demo account at many of the Forex educational sites available on the Internet. There's no question Forex offers the trader the opportunity to earn a boat load of money. You can also invest a modest amount for a Forex simulator, which allows you to explore a never- ending variety of market conditions and see the impact they' ve had on currencies in the past. However, as with any other form of trading, and particularly because this is such a liquid market, it does have its risk. No trader will make money on every trade, and even seasoned traders can get caught and face substantial loses if they aren' t careful and wise.