What Is Forex Or The Forex Market?
The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.9 trillion changing hands every day.
That is larger than all US equity and Treasury markets combined!
Unlike other financial markets that operate at a centralized location (i.e. stock exchange), the worldwide Forex market has no central location. It is a global electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of national currencies. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centres in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.
Traditionally, access to the Forex market has been made available only to banks and other large financial institutions. With advances in technology over the years, however, the Forex market is now available to everybody, from banks to money managers to individual traders trading retail accounts. The time to get involved in this exciting global market has never been better than now. Open an account and become an active player in the largest market on the planet.
The Forex Market is very different than trading currencies on the futures market, and a lot easier, than trading stocks or commodities.
Whether you are aware of it or not, you already play a role in the Forex market. The simple fact that you have money in your pocket makes you an investor in currency, particularly in the US Dollar. By holding US Dollars, you have elected not to hold the currencies of other nations. Your purchases of stocks, bonds or other investments, along with money deposited in your bank account, represent investments that rely heavily on the integrity of the value of their denominated currency ¨the US Dollar. Due to the changing value of the US Dollar and the resulting fluctuations in exchange rates, your investments may change in value, affecting your overall financial status. With this in mind, it should be no surprise that many investors have taken advantage of the fluctuation in Exchange Rates, using the volatility of the Foreign Exchange market as a way to increase their capital.
As an example, suppose you had $1000 and bought Euros when the exchange rate was 1.50 Euros to the dollar. You would then have 1500 Euros. If the value of Euros against the US dollar increased then you would sell (exchange) your Euros for dollars and have more dollars than you started with.
The way to represent a pair of currencies for exchange is as follows:
EUR/USD last trade 1.5000; this means One Euro is worth $1.50 US dollars.
The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.
The Forex plays a vital role in the world economy and there will always be a tremendous need for the exchange of currencies. International trade increases as technology and communication increases. As long as there is international trade, there will be a Forex market. The FX market has to exist so a country like Germany can sell products in the United States and be able to receive Euros in exchange for US Dollar.
Currency Trading and its Risks:
Margined currency trading is an extremely risky form of investment and is only suitable for individuals and institutions capable of handling the potential losses it entails. An account with a broker allows you to trade foreign currencies on a highly leveraged basis (up to about 400 times your account equity). The funds in an account that is trading at maximum leverage may be completely lost if the position(s) held in the account experiences even a one percent swing in value. Given the possibility of losing one’s entire investment, speculation in the foreign exchange market should only be conducted with risk capital funds that, if lost, will not significantly affect the investor’s financial well-being.
Watch the video related to forex capital
Meet John at the FXCM Expo in Las Vegas May 2-4 www.FXCMEXPO.com Produced by: DailyFX.com Daily wrap-up of the US Forex market trading session with DailyFX Currency Strategist John Kicklighter. Includes coverage of economic and financial market news, as well as an outlook for the next 24 hours and trading ideas.
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What is the tax rate on Capital gains when investing in the FOREX?About Author
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February 4th, 2010 at 10:02 pm
Forex (or foreign exchange) market is a market where different national currencies are bought and sold. In order to make money in the forex market, you need a good trading strategy extensively backtested on at least 15 years of data. Better yet, you should have a suite of strategies and a strategy for changing strategies…
February 4th, 2010 at 11:01 pm
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February 5th, 2010 at 1:57 pm
Most amateur or 'retail' forex investors lose money. It's similar to day-trading on the stock market in that it's closer to gambling than investing (at least the way that most amateurs approach it). It's easier to make money being a long-term, sensible investor in the stock market. However, knowledgeable people can make money on forex. Many of these successful forex investors invest in stocks, bonds, and other things — forex is only one aspect of their investing.
February 6th, 2010 at 2:27 pm
NC, has the best info.
Only thing I will add is that you will be trading on margin.
Some of the exchanges will 'guarantee' you will not lose your initial investment. They do that by putting a stop lose on your position, which you have no control over, and will take you flat in a heart beat if they think you are going into the hole.
Even with that 'guarantee', you can still windup owing them LOTS of money.
February 7th, 2010 at 7:56 am
The sessions have to do with times when markets are especially active. New York session covers typical work day on East Coast. This is when economic numbers are released, trading desks are fully staffed and the real decision makers are at work. It is high volume period, after which, normally, there is less activity. But you can trade around the clock.
February 7th, 2010 at 7:59 am
First, I suggest to sign up for a demo account. Trade until you able to consistently making profit. Then, put in some real money that you can afford to loss. You may loss it, treat it as tuition fee. Finally, hopefully you would have master the skill to win in the long run.
There are many free resources, just search it online. Good luck.
February 7th, 2010 at 12:57 pm
A market order is an order to buy or sell a stock at the current market price. Unless you specify otherwise, your broker will enter your order as a market order. If you specify the price- thats the create order. See for further explanations http://www.howtotradeforeigncurrency.com/how-to-place-a-market-order.php
February 7th, 2010 at 4:34 pm
The best periods to calculate pivots are the daily and weekly periods. If you trade with daily charts, use the weekly pivots. If you trade intraday, use the daily pivots.
Good luck
February 8th, 2010 at 3:09 am
I am trading in Forex market in India with http://www.finexo.com/, which is a business partner of Denmark's Saxo Bank, with its headquarters located in Düsseldorf, Germany.
Here you can open a mini account with $100 and can start trading with it. the leverage provided by finexo is 1:200. You can deposit money using VISA, MASTERCARD and DINERS. They charge the spread (depending on the currency pair, and account type: mini: 5 pips, classic: 3 pips, VIP: 2 pips,). which is very low compared to other dealers.
I earn 11.5% monthly return and my portfolio is managed by the Best in industry.
I am providing various links which contain rules and regulations issued by RBI. Find the best which suits you.