Forex General Overview


Foreign Exchange, popularly known as Forex, is a market where the buying and selling of currency takes place. Forex is the world’s largest trading market, with a large number or traders, brokers, and investors participating. The Forex system can be accessed 24 hours a day, Monday through Friday, and access is available via the internet at any time. The Forex market is very much different than tradition trade markets, including the stock market. One of the major differences is the extremely large amount of money that is involved.

With more than 3 trillion dollars traded every day, Forex involves trading currencies all over the world such as British Pound, US Dollar, Japanese Yen and EURO. Currency is paired up in the market against each other. The most common currency pairs are EURUSD (Euro/ US Dollar), GBP/USD (British pound/ US dollar), and USD/JPY (US dollar/Japanese Yen). These pairs are commonly referred to as ‘Majors’ and ‘Minors’.

Forex, unlike other exchange markets, is an Interbank/Interdealer market where the transfer or trading is done via a broker or a bank. Forex is also referred as over the counter (OTC) market, because it has no central building or land based office and all the trading is done on the phone or via internet. That is why the Foreign Exchange market is considered to be the most liquid market in the world.

Since Forex involves currencies around the world, there are a lot of factors that could affect the prices of currency trading. Such factors are affected by political, economical or social changes of a particular country. Some causes of the currency prices fluctuation may be due to change in quotes or policies of banks since a lot of major banks around the world are the major players in the Forex Market.

The Forex market is very unstable due to everyday factors that could easily affect currency trading. That is why Forex is a very serious matter and a lot of traders or brokers offer Forex education through Forex Trading courses and Forex Books which are available over the internet. If you are considering trading in Forex, it is important for you to undergo these courses. Forex requires various skills and knowledge for you to be a successful trader.

In trading, you will encounter terms used such as pips, spread and bid that may sound confusing. Forex has management tools that can make it easier for a new comer. For example, you can set up a demo account that allows a new trader to trade with “fake” money in order to get a feel for the market. This is a great tool to utilize to prepare you in trading with real money.

It is important to remember that the key to a successful trader is patience and discipline. Forex is a not for those who are over-confident and without prior knowledge. Skill, knowledge, and experience are the keys to success in the Forex market.

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