The Foreign Exchange Market (Forex) has no central exchange location yet
it is the largest financial market in the world. It is over 3x's the
size of the stock and futures markets combined and operates via an
electronic network of a banks, corporations and investors.
Foreign exchange consists of a simultaneous buying of one currency and
selling of another. Currency is traded in pairs, in other words, one
currency is traded for another. The major currencies are:
USD — United States Dollar
EUR — Euro members Euro
JPY — Japan Yen
GBP — Great Britian pound
CHF — Switzerland franc
CAD — Canadian dollar
AUD — Australia dollar
There are 2 types of investors involved in the Forex market.The first
type of investor is the hedger. The hedger is involved in International
trades and utilizes Forex trading to protect their interest in a
transaction from adverse currency fluctuations. The 2nd type of
investor is the speculator who invests in currency solely for profit.
Currency prices fluctuate due to a variety of economic and political factors. The major factors are:
Interest rates
International trade
Inflation
Political stability
There are many reasons investors take a great interest in FX trading Some of the major reasons are:
No fees
No middlemen
No fixed trade sizes
Low transaction cost
High liquidity
Instant transactions
Low margin / High leverage
24 hour market
Online access via online trading platforms
Always good opportunities to trade, unlike the stock market the market is never bullish or bearish.
No one entity can control the market
No insider trading can occur
To begin trading in the Forex market, an investor only needs a
computer, a high-speed internet connection and an online trading
currency account. A mini account can be opened for as little as $100.
These are some of the reasons why Forex trading has become quite popular in recent years
