So You Want to Know About Forex?

So You Want to Know About Forex

What is Forex and Where is it Sold?

The Forex market is very similar to something you’re probably more familiar with, the equities market, more commonly known as the stock market. It is the place where banks, investors, and traders speculate and exchange various currencies from all over the world. This market boasts a volume of nearly $3.98 trillion per day and is regarded as the largest and most liquid marketplace in the world. The most important centers for trade are in New York, London, Tokyo, Zurich, Frankfurt, Singapore, Hong Kong, Paris, and Sydney.

What is Forex Trading?

Forex trading can be done between institutional investors or by the average person from the comfort of their home. An opportunity for a profitable trade exists when there are inefficiencies in the marketplace that cause currencies to be improperly priced. For instances, if the U.S. Government is planning to introduce a monetary policy that could cause a deflation in the value of the U.S. dollar, it may be a wise idea to invest into other currencies before the value drops. Consequently, another person may choose to invest in the devalued U.S. dollar as an investment, in hopes that within the coming months it will return to its original strength in order to turn a profit.

So You Want to Know About ForexWho Are The Main Players in The Forex Market?

  • Banks – Large institutional investors who may be trading on behalf of their own account or for those of customers.
  • Companies – Large corporations use Forex trading as a method of hedging against inflation and other market risks.
  • Governments – Governments buy and sell other currencies as a means to manipulate the value of their own.
  • Hedge Funds – Since most Forex trades are speculative in nature, there is no wonder why Hedge funds would play a role in this market.
  • Investors – Large asset managers may trade currencies in the manner listed above. They are usually in it for the long haul and making decisions based on monetary policy.
  • Personal Traders – Everyday people who watch the trends of the markets and trade based on that.

What Are The Advantages to Forex Trading?

  • With the largest marketplace and highest volatility, liquidity will never be an issue.
  • Since the markets are open virtually 24/7, the opportunities for trading are endless. Most people find time to trade before and after work.
  • The Forex market offers trades commission free. This means that you are able to trade as many times as you’d like without the worry of your profits being eaten up by unnecessary fees.
  • The high volatility in the marketplace allows traders to use that to their advantage to turn a profit.

Overall the Forex market is a great market to be involved in. The lack of fees and plethora of information available make turning a profit possible, even for the layperson. The most important thing to remember, as with all trading, is that there is a real risk of losing money and that should be taken seriously. Before investing in the Forex market be sure to do your homework and understand fully what you are getting into. Once you understand this volatile market and all of the nuances associated with it, you will find that it is one of the most satisfying marketplaces in the world and that there are endless profits to be made from it.


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