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What is Forex?

 

 

FOREX — the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world. Full-fledged existence Forex market started since 1977. When all countries are finally switched to a system of floating exchange rates.

The leading currencies of the Forex market are: the U.S. dollar, British pound, euro, Swiss franc and Japanese yen. In addition to a number of major currencies dealing centers offer a trade in the Canadian and Australian dollar, Swedish and Norwegian crowns, etc. The main actors are the major forex central and commercial banks, enterprises, investment funds, etc., ie organization whose business is related to the exchange of one currency for another, and private speculators.

Forex market by volume than all other markets. For example, the daily amount of the securities market is approximately $ 300 billion, while the forex market is estimated to 1-2 billion dollars a day! However, Forex is not a "market" in the traditional sense. He has no specific place of trade, such as currency futures. All Forex trading is by telephone and through computer terminals at the same time in thousands of banks and offices worldwide.

Futures and stock markets have another big difference, and at the same time, the inconvenience of all trading operations are terminated at the end of the day and resumed only next morning.

Forex market is - open 24 hours a day, and currency exchange throughout the work week shall be terminated. Practically in every time zone (that is, in London, New York, Tokyo, Hong Kong, Sydney, etc.) there are dealers who buy or sell a particular currency. The world's leading stock exchange opens with the change of time zones, from Wellington and finishing California. Accordingly, the forex market is divided into four major trading sessions:

  • Pacific trading session (Wellington and Sydney).
  • Asian (Tokyo, Hong Kong and Singapore).
  • Europe (Frankfurt, Zurich, Paris and London).
  • American (New York and Chicago).
Each trading session lasts for 8 hours every working day, on weekends Forex market does not work, and traders - have a rest.

 

To the undoubted merit of the Forex market can be attributed principle of margin trading (margin trade). The essence of this principle is that the client for trading granted leverage of 50, 100 or sometimes more times greater than his means. Thus, a market participant that has even modest amounts can make a very solid deal.

Leverage is the ratio of the volume of foreign exchange, which trades a trader in the forex market, the total volume of money trader.

In practice, it looks like: 1:100.

This entry indicates that having a portfolio of $ 100 you can make a deal with a lot of $ 10 000.

Forex Leverage can have values from 1:1 to 1:100. At the same leverage of 1:100 at the currency exchange, basically, is tolerance or ceiling.

Novice traders should pay close attention to the following information. Allowable share of risk in the work of the foreign exchange market, according to experts, should not exceed 5-10% of the capital invested. Later, having developed his own system of work in the FOREX market and learning how to manage forex tools, you can justifiably take risks and make large profits. The logic here is that reducing leverage, forex, we take a lower price, and at the same time reduce the probable loss.

You must understand that Forex leverage - is not nothing but a valid value of credit allocated to the work of the foreign exchange market. This means that within the framework of from 1:1 to 1:100, you can use leverage in the transaction at its discretion.

Advantages of Forex trader profession before many other professions:

  1. Complete freedom of movement. You can stay and work anywhere in the world. All that you need - is an Internet connection;
  2. The possibility of high earnings in a very short period of time;
  3. Amount of money you earned depends on you and your ability to trade on the Forex market;
  4. Possibility to trade round the clock. Since the Forex market operates 24 hours a day, 5 days a week. So work on it at any convenient time for you.

Forex Trader - is not one of those many professions, are not affected by economic crises. Rather the opposite affect crises, but only for the better. Since the during economic crises, currency movements are becoming stronger and more frequent. And it increases the possibility of big money!

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