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For
those of you who don’t
know it
already, FOREX
trading is a form of
direct access trading
for different kinds of
foreign
currencies.
Formerly,
foreign exchange
trading was generally
limited to big banks
and institutionalized
traders. However,
recent advancements in
technology have made it
so that smaller traders
can also make the most
of FOREX’s many
benefits by making use
of the diverse online
trading stands to
trade.
All the world’s currencies
are on exchange rates
which is constantly
fluctuating. These
currencies are also always
traded in pairs
Dollar/Pound, Euro/Dollar,
etc. Approximately 85 per
cent of all the
transactions which are
recorded daily involve
trading of all the major
currencies.
For investment reasons 4
(four) main currency pairs
are usually used. These
currencies are: the Euro
against the US dollar, the
US dollar against the
Japanese Yen, the British
pound against the US
dollar, and the US dollar
against the Swiss franc. In
the trading market these
four currency pairs look
like this:
EUR/USD
USD/JPY
GBP/USD,
and
USD/CHF.
Take note
also that no dividends are
paid on
currencies.
If you think one currency
will increase in value
against another currency
you may exchange the latter
for the former and be able
to stay in it. If
everything goes as planned,
eventually the opposite
deal can be made in that
you can exchange this first
currency back for that
other and then collect all
the profits it may
bring.
FOREX market transactions
are carried out by dealers
at main banks as well as
FOREX companies for
brokerage. FOREX is a
necessary and very much
ongoing part of the world
wide market. When you’re
sleeping in your bed at
night, dealers in Europe
will be trading currencies
along with their Japanese
colleagues.
It is therefore indeed
reasonable that you
consider that the FOREX
market is active 24 hours a
day. Dealers at major
institutions have their
24/7 work in three separate
shifts. Clients are able to
place, take-profit, and
stop-loss orders with the
brokers for an execution
which can be done
overnight.
The price movements are
quite smooth on the FOREX
market and without the gaps
that people face almost
every day on the stock
market. The FOREX market’s
daily turnover is
approximately $1.2
trillion, so a new investor
will have no problems with
enter and exit
positions.
Read
more FOREX
facts
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