FOREX: What Is It? FOREX, an acronym for Foreign Exchange, is the largest financial market in the world. With an estimated $1.5 trillion in currencies traded daily, Forex provides income to millions of traders and large banks worldwide. The foreign exchange market, or the "FX" market, is where the buying and selling of different currencies takes place. There are three main centers of trading, which handle the majority of allFX transactions—United Kingdom, United States, and Japan.
FOREX : Why? The Purpose of Forex : The foreign exchange market is the mechanism by which currencies are valued relative to one another, and exchanged. The exchange rate is determined through the interaction of market forces dealing with supply and demand. Foreign Exchange Traders generate profits, or losses, by speculating whether a currency will rise or fall in value in comparison to another currency.
History The history of stock exchanges can be traced to 12th century France, when the first brokers are believed to have developed, trading in debt and government securities. Unofficial stock markets existed across Europe through the 1600s, where brokers would meet outside or in coffee houses to make trades. The Amsterdam Stock Exchange, created in 1602, became the first official stock exchange when it began trading shares of the Dutch East India Company.
Major Players The main players on the foreign exchange market are : Banksand other financial institutions Brokers Customers Firms Central banks
Major Currencies In the FOREX market most trading takes place in only a few currencies: The U.S. Dollar ($) European Currency Unit (€) Japanese Yen (¥) British Pound Sterling (£) Swiss Franc (Sf) Canadian Dollar (Can$) and The Australian and New Zealand Dollars, to a lesser extent.
Types of Accounts Live Account: Live account is for those people who are ready to explore and experiment with the real world of Currency Trading. Practice Account: - Practice Account is a great way to get started and learning the fact, features and specifics of the Forex Market. - It gives you the best way to learn and practice trading for free, with no risk of losing money involved.
Business Hours A 24 Hour Market The Timings of the Major financial centers:
Aspects of Forex Trading Although good instincts and speculatory skills are invaluable to any trader, there are also other, more scientific indicators that traders use to decide whether they will buy or sell a certain currency. These are found by : Fundamental analysis Technical analysis A trader may utilize both technical and fundamental analysis before making any forex trades.
Fundamental Analysis Fundamental Factors include economic and political events (i.e. elections, wars) that occur worldwide. A trader that makes his or her market decisions in response to these releases and events is using fundamental analysis. Fundamental factors: GDP GNP Interest rates Inflation
Technical Analysis A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. A technical analysis is founded on three suppositions: Movement of the market considers everything. Movement of prices is purposeful. History repeats itself.