Basics of Forex Trading

What is the forex? If you are new to the investment market, you may have wondering this very question. After all, investment professionals and business people around the world talk about forex trading. So, it makes sense that you are curious about this sector of the investment world.

Forex-also called FX-is simply a combination of the first syllables in the words 'foreign' and 'exchange.' These two words are important to the meaning of the term as well, because the forex is an electronic foreign exchange system.

Trading through forex does not involve actual commodities or goods; instead, it involves the currency of various countries. In other words, when you trade via forex, you are trading the value of one currency-perhaps the United States Dollar-versus the value of a second currency-for example, the Japanese Yen.

Any currency can be traded on the foreign exchange, yet traders and investment advisors often have their preferences. These often include the four pairs of currencies that are considered the major pairs: the Euro/Dollar (EUR/USD), the Pound/Dollar (GBP/USD), the Dollar/Yen (USD/JPY), and the Dollar/Franc (USD/CHF). Many FX traders prefer to stick to trading these major pairs for simplicity; others choose to watch the market carefully and trade currency pairs based upon market standings.

Trading specialists buy in the demand zone and sell in supply zone, and the Euro/Yen has very typical supply and demand tendencies. The forex market is open all day and night, five days per week. This near-continuous operation allows traders from all over the world to participate in the market with no regard to time zones. The market is closed on weekends.

Every day that the forex market is open, incredible numbers of trades are completed. The FX market is actually over 30 times as large as any other financial market. The huge volume of trades and the availability of trading within many different companies make the foreign exchange market quite attractive to investors.

Forex is fun to trade because it is open 24 hours a day, five and a half days a week. It also has the most liquidity out of any market.

The forex market provides unique opportunities to traders, ones that are not available from other trading tools. For example, there is no slippage on Stop orders during regular trading hours. This-and other benefits of forex trading-can be quite advantageous to investors.

Trading on the foreign exchange can be completed through investment advisors. But most experts agree that the best way to get involved in forex trading is to use an online forex trading platform for your investing. Online trading systems can provide you with trading alerts and tutorials to help you get started in the world of currency trading.


Article Written By Jennifer Greenfield