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What is forex?

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FREE FOREX COURSE

INTRODUCTION TO FOREX The forex market is the foreign exchange market. Forex is acronym for Foreign Exchange market. It is the largest market in the world, with a turnover of more than 4 trillion dollars daily. To understand what this means turnover, is what can move the New York Stock Exchange (the largest in the world) throughout a trading month.

What is traded in the Forex? Money, yes, Forex trading involves buying and selling foreign exchange, currencies, ie money. Currencies are traded through a broker or dealer and are traded in pairs, for example Euro and U.S. dollar (EUR / USD). I really do not buy or sell anything physical for what may be a little confused. Think about buying currency as buying a share in a country's economy, as the price of its currency is a direct reflection of what the market thinks about the present and future state of the economy. In Forex, as mentioned, is traded in currency pairs, as stated in this paragraph, the trading price of a particular currency pair reflects the economic conditions of a country versus country of the other currency that makes up the pair. Unlike other financial markets, the Forex market is decentralized and has no physical location. The Forex market is considered an interbank market or OTC (over-the-counter), due to the fact that this market functions electronically in a network between banks 24 hours a day. In the late 90s of the twentieth century, only investors with high financial power they had access to trade in Forex, with an initial capital of 10 million dollars. Forex was originally designed to be used by banks and large institutions. However, due to the expansion of the internet, there are now companies online Forex that offer the trade in Forex "retail" for retail investors.

What currencies are traded in Forex? You almost as many countries or economic communities (such as Europe). These are the most traded currencies: (The Forex symbols are always three letters, the firsts identifying the country and the third currency)

Symbol Currency Country Nickname
USD United States dollar United States Buck
EUR Euro Europe Fiber
JPY Japanese yen Japan Yen
GBP pound sterling Britain cable
CHF Swiss Franco Switzerland Swissy
CAD Canadian dollar Canada Loonie
AUD Australian dollar Australia Aussie
NZD New Zealand dollar Zealand Kiwi

Of all currencies, the U.S. dollar is the most operated, followed by the euro, the Japanese yen and the British pound.

When is it traded in Forex? The Forex market is unique, is open 24 hours a day. From Tokyo to New York via London, the market is moving and can operate at any time, day or night. Opening and closing of the three major centers (time expressed in GMT): Tokyo: Opens at 0 hours and closes 9. London: Opens at 8 and closes 17. New York: Opens at 13 and closes at 22.

Top Features of Forex trading

  • No commissions. Usually the trader is not loaded with commissions of almost any kind. The brokers through which operates the spread charge, typically represents less than 0.1 percent of operating cost, in larger brokers may even be less than 0.07 percent, of course depends on LEVERAGE, this will be discussed in more detail later
  • Without intermediaries. The Forex market is the "spot" market Forex, which means trade directly with the market.
  • Lots flexible. The minimum contract is very flexible in operation Forex versus other markets. And you can choose the size you operation. This allows part with as little as $ 50 USD, you can even operate cents! (Although not good operate as small beads, what you will discover along the way).
  • Schedule 24 hours.  From Sunday night until Friday afternoon you can operate at any time of the day, even in principle, there is no deadline for the closing of your transaction.
  • Leverage. A small amount of capital can control a much larger volume of trade in Forex, this is due to the high leverage available in this market. For example a 100:1 leverage, you can do an operation 100 thousand coins with a deposit of just thousand. But this is a double-edged sword, using high leverage can lead to large gains or high losses.
  • High liquidity. Being such a huge market, liquidity offering is equally huge.  This means that under normal conditions of the market, you can buy or sell instantly.
  • Mini and micro trading. You can start trading Forex with mini or micro accounts that require small minimum deposits, $ 500 or less. This makes it accessible to almost everyone, however, to operate with appropriate risk control can be recommended a larger initial deposit, you will already understand it.

Source: Flickr.com    

 Next lesson: 2. What do I need to trade Forex?

Source: www.efxto.com

Erick Gálvez
Author: Erick GálvezWebsite: http://www.asdforex..comEmail: This email address is being protected from spambots. You need JavaScript enabled to view it.
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ASDForex manager and professional trader since 2008. I am also Aleforex.com manager where you can view the services that I give
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