FOREX is the world’s largest and most liquid trading market. Many consider FOREX as the best home business you can ever venture in. already though regular people have had the opportunity to take part in trading foreign currencies for profit (in the same way edges and large corporations do) since 1998, it is just now becoming the cool, hip, new “thing” to talk about at parties, business events, and other social gatherings.
already though it has been slightly of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.
But, nevertheless, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be conquer, the mind
has to be open and the slate has to be clear for starting out fresh with the CORRECT information.
So, in this article, it is my attempt to give you some substantial, but not over-detailed, information on just what the heck “FX” (FOREX) method, what it is, and why it exists.
As a successful trader said, Trading FOREX is like picking money up off the floor. Not trading FOREX is like leaving it there for someone else to pick up.” Others in the industry
have also said, Trading FOREX is like having an ATM machine on your own computer.
Here’s an explanation (one I feel you’ll appreciate) of what FOREX is and how a bunch of traders, profit from it:
The Foreign Exchange Market, also referred to the “FOREX” or “FX” market, is the identify (cash) market for money.
But, don’t mistake FX as trading the futures market, where you buy a contract to buy a particular money at a future price in time.
What FX traders do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks.
So, you’re probably wondering where it’s at … or … how to access the FX market?
The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or ‘Interbank’ market, due to the fact that the complete market is run electronically, within a network of edges, continuously over a 24-hour period.
Yes, if that’s the first time you’ve heard about an all-electronic market, I know this may sound slightly intriguing to you.
Here’s what you are truly trading when you participate in the Foreign Exchange (FOREX) market:
Essentially, like the large edges who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is
simultaneously exchanging one countries money for another. So, in actuality, they’re electronically trading a money-pair and the price that is quoted to us is the exchange rate
between the two currencies.
In other words, simply the quoted price is how many of the one money is worth 1 of the other money.
EUR/USD last trade 1.2850 – One Euro is worth $1.2850 US dollars.The first money (in this example, the EURO) is referred to as the base money and the second (/USD) as the counter or quote money.
The FOREX has a DAILY trading quantity of around $1.5 trillion dollars – 30 times larger than the combined quantity of all U.S. equity markets. This method that 1,498,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would nevertheless have more money left than the New York Stock exchange every day!
The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar.
There’s plenty of money to be made using FOREX for plenty of traders that use the right trading techniques / tactics that will allow them to profit immensely. And, with only 5% of the daily turnover of quantity coming from edges, government and large corporations who need to hedge, the other 95% is for speculation and profit.