1. FOREX The Forex market was essentially a private yet exclusive source of wealth for hedge funds, banks, corporations, or private high net worth individuals with the ability and connection into the interbank networks. But with the rapid development of the Internet, Forex is now available and accessible to traders worldwide. As a matter of fact, with the convenience of brokers, Forex trading is as common as trading the stock market for most people. Forex is of course, one of the most volatile financial markets in the world. With over 3 trillion dollars of daily volume, the liquidity is second to none. Traders could win or lose thousands to hundreds of thousands of dollars in a matter of minutes, especially during news releases times. However, at the same time the market could also trend for days to months, it is definitely a versatile market to trade. FOREX ( Courtesy of HenryLiuForex.com )

2. FOREX Forexdiffers from the stock market in many different ways, traders who prefer fundamental analysis can just focus on the economic outlooks of the major 8 countries, instead of shifting through thousands of stock symbols. For those who are well-versed in technical analysis, because the Foreign Exchange market is so huge, no one entity could manipulate it for any extended period of time, technical analysis studies sometimes perform better than in other markets, such as the equity or commodity markets. FOREX ( Courtesy of HenryLiuForex.com )

3. FOREX The essence in Forex trading could be summarized in just one word, speculation, which is to estimate the value of one currency versus another. The difference with buying stocks is that you have to be aware of both sides of a coin, instead of just buying an individual stock. For instance, if you are trading Euro versus the USD, you have to focus on the fundamental of the Euro Zone versus the fundamental of the United States. The direction of these currencies will rest on the relative outlook of these two countries, and the key word is relative. We could have a weak European economy yet seeing Euro gaining against the USD because the U.S. economy is weaker. FOREX ( Courtesy of HenryLiuForex.com )

4. FOREX So what affects the Forex market? Well I think the answer to that question is Interest Rate, because interest rate is what drives every financial markets, including Forex. Consider that currencies are just assets, and interest rates are the return on the assets. If interest rate is high, demand for the currency rises, and because of the high demand for the currency, the value for the currency also goes up. Therefore, if the central bank of Australia decides to raise its interest rate, the value of the Aussie will also go up. FOREX ( Courtesy of HenryLiuForex.com )

5. FOREX Speculators look at the overall interest rates between these major currencies and they will buy a low interest rate currency, such as the Japanese Yen, with a high yield currency, such as the Australian dollar, with the hopes that the exchange rate will move in the direction of the interest rate, and they would be right during normal market conditions because the majority of the 3 trillion daily volume in the Forex market is based on this kind of trading, known as carry trades. Forextrading is one of the most exciting financial instruments in the world of trading. It has a great potential for return, especially with brokers that provide 50 to 1 leverage, anyone could open an account and start trading Forex today. FOREX ( Courtesy of HenryLiuForex.com )