Foreign Exchange Basics: Trading The Forex Market

This article on currency markets basics will look at forex market. There is much to discover about the foreign exchange market, and you have to understand how it works, if you plan to take concrete steps to become a successful forex traders. 

You will come across several different expressions of the forex market. Forex and eg are both short ways to say 'foreign currency. It can also be called the currency market, the foreign currency market, currency trading market, etc. All these terms refer to the same international market where currencies of the world are exchanged and traded. 

The forex market is not located in a particular location. Almost all countries involved, so it is possible to trade currencies in most countries. Because of this, the market runs 24 hours a day, five days a week. Week starts on Monday morning in Sydney, Australia (for 5 Sunday EST in the U.S.) and ends at 4 pm EST on Friday in New York. During this period, it is always possible to trade currencies, somewhere in the world. 

The forex market is a surprisingly recent phenomenon. Until the 1970s, the currencies remained stable in relation to each other since the Second World War. What was the 'gold standard' gave each a currency value against the dollar. This system was introduced to maintain a stable world economy. 

But in the early '70s in the United States abandoned the gold standard and value of different currencies began to change. Banks immediately began to exchange currencies for profit, buy low and sell high, instead of just doing the exchanges, when they needed to transfer money from one country to another. In reality, each currency a tradable commodity. This was the beginning of forex trading. 

The value of a currency is in a sense, the value of the nation whose currency is so, like companies in the stock, if a nation is successful the value of its currency rise, and if it does, however, a crisis that value decreases. These fluctuations can be large and can happen very quickly. The amounts involved can be enormous for. The total value of transactions on the forex market is now on average nearly 2 trillion U.S. dollars U.S. dollars a day. 

The market is still dominated by international and investment banks, large corporations and other large financial institutions. But it is possible to act as a private person through a broker, with the advent of Internet has become much more popular. There is now a large number of people involved in forex trading through their home computers, but because they act much smaller amounts than the institutions they represent only about 2% of the total forex market. 

The most common subjects include U.S. dollar against other currencies (especially the euro, British pound, Japanese yen, Swiss franc and Australian dollar), but it is possible to trade any currency against another. Many of the automated forex robots used by individual traders to concentrate on smaller pairs such as the pound against the euro. 

Foreign exchange market is huge, and a single operator can feel like a little ant dodging around the feet of elephants. But anyone can get into it if they have a little capital that they are willing to risk. Some brokers will let you start with as little as $ 250. Before investing any money, but it is best to practice with a forex demo account while you learn foreign exchange basics.