The Forex Market Explained
Thanks to Knowledge to Action for providing background information for my post.
The term “Forex Market” means the Foreign Exchange Market and it is the worlds’ largest market place. To give you an idea of the sheer size of the Forex Market – it trades in the region of $3 trillion dollars each and every day, and for this reason the forex market attracts Millionaire and Billionaire traders. Any trader can potentially make millions of dollars trading in this market.
Because the Forex Market is so liquid you can trade any time and the cost of trading in this market is low and once you are an established trader the costs of trading are fixed.
The More the Merrier
For the Forex Market to work for you there needs to be lots of trader participation, because it is the most participated in market on the planet the signals are reliable. This means that unlike many markets a few “rogue” people cannot affect the market and any volatility on their part is evened out over the sheer size and volume of the market.
So Why Trade Forex?
There are many advantages of trading in the Foreign exchange market over other types of investment, these include;
- Trade when you want too – The Forex Market is open 24 hours a day, so no matter where you are in the world, whether you like to start early or finish late, the forex market is open and operating.
- Forex market does not have gaps – this means there are no spaces on the trading chart while the forex is operating, there is always something happening.
- Dealing costs are minimal – costs of trading in forex are not driven by market conditions, they are generally fixed, so you know going into a trade what the trading cost will be.
Currency Pairs
Often trading in the Foreign exchange can seem simple – buying and selling a currency and making a profit on the difference. In reality there is more to it than that and when trading there are always two currencies – this is called “Currency Pairs”. There is a Base and a Terms, the Base is always comes first and in the pair it is always equal to 1. The term is the second currency and tells you how much currency you can buy for the base unit, so if you are pairing the US dollar (USD) with the Euro (EUR) and you read the trade as EURUSD 1.5120 this means that 1 euro buys 1.5120 USD.
This article was based on information in the “Millionaire Forex Trader Secrets Report” by Greg Secker.
