What is Forex Trading?Foreign exchange, forex or FX all describe the trading of the world's currencies. The forex market is the largest market in the world, far larger in fact than the stockmarket, trades amount to more than $ 2 trillion each and every day. To put this in perspective this is more than 100 times the daily trading on the NYSE.
Forex trading is conducted by the “interbank” market, which is an over the counter market. Trades are made directly between the two counterparts involved, either over the telephone or electronically. The worldwide distribution of trading centres means that forex trading is a 24-hour market.
The most important forex market by volume is the spot market, called spot market because trades are settled immediately. This immediately in fact means two banking days, but that's banks for you !
One of the major advantages of foreign currency trading is that you can trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT).
Another advantage is that the forex market is so liquid that there are always buyers and sellers to trade with, this liquidity also ensures price stability and narrow spreads.
Forex is often also traded without commissions which naturally makes it very attractive as an investment for frequent investors. How much of your hard-earned stockmarket gains disappear in commissions ?
Leverage (gearing) means that you can hold a position worth up to 100 times more than your margin deposit.
Strangely you don’t need an enormous amount of money to trade the forex markets. Some firms will open an account for $250. Short selling is also just as easy as going long, which is not always the case with stock trading.
I have only just started taking an interest in forex trading and am surprised to find that it looks quite attractive and more straightforward than I thought ! For further information please check out the links.
Comments and suggestions most welcome.
currency trading for beginners