Learn How to Trade Forex like the pros!
FOREX is an abbreviation of "Foreign Exchange," which refers to an international foreign exchange market, where money is sold and bought freely. Forex, as we know it today was originally launched in the 1970s, with the ushering of free exchange rates, and it is the participants of the market that set the price of one currency against another, and this according to supply and demand.
Forex is the Perfect Market!
Forex can honestly be called a perfect market, as far as the freedom from external control and free competition are concerned. It is also more objective because if one of its participants schemes to change prices, for his/hers own manipulative reasons, he/she would have to operate with tens of billions dollars. For this reason, cornering the market is highly improbable.
Forex Liquidity - what is it?
Liquidity is considered to be a very attractive feature in forex trading market, because it allows traders to open and/or close positions within few seconds. In fact, the traders hold a position is totally arbitrary and has no limits. It can last from several seconds to many years. It depends only on your trading strategies.
Daily volume
According to some assessments, money masses traded each day in the forex market reach 1 to 1.5 trillion US dollars. Since forex trading is not a centralized trading, the exact number cannot be determined. Transactions are conducted all over the world via different means of communications, 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday.
What is Margin Trading?
Margin trading relates to the idea of trading without a real money supply. And this is a good thing since it allows traders to open even a small account in US dollars and buy and sell a lot of other currencies. Furthermore, transactions are conducted very quickly, and one can make big profits when exchange rates go up or down. Of course, traders must be very cautious, otherwise their account can blow up their account without them even knowing it. Margin trading is trading with borrowed capital which you can borrow with only 0.5% to 4% of the sum.
Buying and Selling in Forex
When trading forex, you don't have to buy a currency first in order to sell it later. It's possible to open positions for buying and selling in any currency without actually having that currency.
Most Tradable Currencies
The major currencies traded in FOREX trading, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).
In Conclusion
The main merits of the FOREX market are:
- The highest number of participants with the largest volumes of transactions;
- Very liquidized: transactions are conducted in econds according to online quotes;
- The market works 24 hours a day, every business day;
- A forex trader can open a position for any period of time he wants;
- No fees, except for the difference between buying and selling prices (spread);
- An opportunity to make a bigger profit on the deposited sum;
- You can make deals any time you like.
Continue to: Learn Forex Trading