Forex Currency Trading For Those New To The Game

The foreign exchange market was the exclusive province of large banks and financial institutions, but with the advent of the Internet it has become a profitable playground for savvy traders. The benefits of Forex market trading are reviewed in this article.

The Forex refers to the foreign exchange currency market. It is the largest financial market in the world, trading more than $2 trillion on average each day. Comparing an average day of the Forex, the average daily volume of $25 billion on the New York Stock Exchange begins to look like chump change. It does not take long before you begin to appreciate the vast size of the foreign exchange market.

Currencies are traded in pairs on the Forex, which involves the simultaneous buying of one currency and the selling of another. You may trade the Euro dollar and the US dollar (EUR/USD) pair or the British pound and the Japanese Yen (GBP/JPY) pair, as examples.

In effect, you are buying the currency of a particular country. This equates to taking a position in that nation's economic growth. The price of the currency is a direct reflection of what the market thinks about the current and future health of that nation's economy. If you buy the Japanese Yen, you are in effect buying a share in the Japanese economy with the belief that their economy will expand in comparison to the economy of other counties.

The Forex has no physical exchange or central market. Instead, it is an Over-the-Counter (OTC) or 'Interbank' market. The entire market is run electronically, within a network of banks.

The market is available continuously open. This 24-hour market is achieved by a transitioning of trading activity around the globe. Trading begins in Sydney, Australia, then shifts to Tokyo, Japan. Next, London, England takes over and then "passes the baton" to New York. As New York shuts down, Sydney is opening for business.

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The Forex market comes with a series of additional benefit, which make it irresistable to traders. There are only seven major currency pairs. Compare that to tracking thousands of stocks. There are no commissions or exchange fees. Your broker simply makes their money from the difference on the bid / ask spread. This is also the most liquid market anywhere.

There are other benefits, but you probably have an idea as to why currency trading is quickly growing in popularity with retail traders. The obstacles to accessing these benefits have been largely eliminated, with knowledge the only barrier between you and forex trading profitability.

Fortunately, the need for education is being addressed. If you wish to learn more about the basics of how the foreign exchange market works, you will find numerous resources on the Internet and can access reliable information from reputable Forex brokers. Once you understand the basics and choose to take the next step, you will want to invest in a solid trading course from a reputable source.

With good instruction, there is very little that stands between you and the ability to benefit from trading the foreign exchange currency market.