Learn Forex
Foreign Exchange
The
foreign exchange (also known as
"Forex" or "FX") market is an
international market where
various currency exchange
transactions take place. In
simple terms, Forex trading is
the buying of one currency and
the selling of another. The
Forex market is the largest,
most liquid market in the world
with an average traded value
that exceeds $1.9 trillion per
day.
There is
no central marketplace for
currency exchange whereas all
trades are conducted
over-the-counter. The Forex is
open 24 hours a day, five days a
week.
The most
frequently traded currencies are
referred to as “Majors” which
represent over 85% of daily
transactions on Forex trading.
These seven currencies are the
US Currency (Dollar, USD),
Japanese Yen (JPY), Euro (EUR),
British Pound (GBP), Swiss Franc
(CHF), Canadian Dollar (CAD) and
Australian Dollar (AUD).
BENEFITS:
24-hour
trading
The main advantage of the Forex
market is that it is a true
24-hour market. No matter what
time it is, there are always
buyers and sellers somewhere in
the world actively trading Forex.
In this way, investors can
respond to breaking news
immediately.
Liquidity
The Forex market is more liquid
than any other market in the
world because there are always
broker/dealers willing to buy or
sell currencies. The Forex
liquidity, particularly for
major currencies, helps ensure
price stability that enables
investors to always open or
close a position, receive a fair
market price, and more
importantly be less vulnerable
to liquidity risk.
Increase in leverage
Leveraged trading, also referred
to as margin trading, allow
investors in the Forex market to
execute trades up to $100,000
with an initial margin of only
$1,000. It is important to
remember that higher gearing
creates greater profits if one
correctly anticipates movements
in Forex prices and vice versa.
Lower
transaction costs
Forex market is much more cost
efficient to invest in terms of
both commissions and transaction
fees. In general, the width of
the spread in a FX transaction
is less than 1/10 as wide as a
stock transaction.
Click here to view an FX trading
example |
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