The Foreign Exchange market which is also known as the “Forex” or “FX” market is by far the largest most liquid market in the world. The average daily turnover is more then 1.9 trillion US dollars per day. That’s a big market! Forex Trading is 30 times larger then all of the U.S. equity markets combined.
Forex Trading is the simultaneous buying of one currency, while at the same time selling another. All currencies are traded in pairs, such as the Euro versus the US Dollar or the US Dollar versus the Japanese Yen. Just remember, all Forex Trading is done in pairs. If you think about trading with fxcm forex broker read this review.
The 2 reasons to buy and sell currencies are this:
1. Around 5% of the daily Forex turnover is due to the fact that companies and governments buy or sell products or even services in foreign countries or they have to convert profits that are made in foreign countries into their own domestic currency.
2. The other reason is that 95% is either trading for profit or for speculation.
For the speculators, the best trading opportunities come from trading the 6 major Forex currencies, also known as the “Majors”. The six Majors include the Euro, US Dollar, Swiss Franc, Japanese Yen, Australian Dollar and the Canadian Dollar. These 6 pairs alone make up 85% of all the transactions involved in trading currencies and therefore are the most liquid.
Forex Trading can allow you to capatalize on a true 24 hour market. Forex Trading begins each day in Sydney Australia, where it then moves around the globe to each financial center starting with Tokyo Japan, London England, and New York USA. Unlike any other financial market out there, investors can respond in real time to fluctuations due to social or political events or economics 24 hours a day 6 days a week.
The FX market is considered an Over The Counter (OTC) or ‘interbank’ market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.
– What is Forex Trading?
– Exchange Rates
– Forex Market History
– The Explosion of the Euro Market
– Dollar-Euro Currency Exchange
– The Australian Dollar
– Forex Forecasting
– Forex Candlestick Chart Patterns
– Forex Risk Management Strategies
– Market size and liquidity
– Market participants
— Commercial companies
— Central banks
— Investment management firms
— Hedge funds
— Retail forex brokers
– Trading characteristics
– Factors affecting currency trading
— Economic factors
— Political conditions
— Market psychology