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What Is Forex Trading?
Foreign Exchange (FOREX), Forex trading, or Fx trading is nothing more than direct access trading of different types of foreign currencies. The foreign exchange market is the largest and most liquid financial market in the world. According to the data from Bank for International Settlements released on September 25, 2007, currency trading volumes have reached to $3.2 trillion changing hands daily; more than the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the forex market has no physical location and no central exchange (off-exchange). It operates through a global network of banks, corporations and individuals trading currency by buying one and selling another. The lack of a physical exchange enables the forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers. The fact is that the foreign exchange market never stops, even on September 11, 2001 you could still get your hands on two-side quotes on currencies. The forex market is opened 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly. Extreme liquidity and the availability of high leverage have helped to spur the market's rapid growth and made it the ideal place for many forex traders. Positions can be opened and closed within minutes or can be held for months. In the past, foreign exchange trading was mostly limited to large banks and institutional traders and not available to small currency traders because of the large minimum transaction sizes and strict financial requirements. However, recent technological advancements have allowed foreign exchange market brokers to be able to break down the larger sized inter-bank units, and offer small traders the opportunity to make money by buying or selling any number of these smaller units. Forex traders can now take advantage of the many benefits of forex trading just by using the various online forex trading platforms to trade forex online. Forex trades can be placed through a forex broker or market maker, and will be the couples, for example the Euro and the U.S. Dollar (EUR / USD), or the Great British Pound and the Japanese Yen (GBP / JPY). If you purchase, for example, the U.S. Dollar, you believe that the health of U.S economy is doing well and expect the currency to appreciate against the other currencies. About 85 percent of all daily transactions involve trading of the four major currency pairs. They are: Euro against U.S. dollar, U.S. dollar against Japanese yen, Great British Pound against U.S. dollar, and US dollar against Swiss franc.
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Daniel S is the author of “Forex Trading To Riches”, and has trained many traders how to be more successful with forex trading.
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Written By Daniel Su, Expert Author and Founder of
