FOREX, (FOReign EXchange Market) Or FX, Is An International Exchange Market Where Stocks And Shares Are Not Traded, But Currency

Category: Finance, Currency Trading.

FOREX, (FOReign EXchange market) or FX, is an international exchange market where stocks and shares are not traded, but currency.

Therefore, Forex trading is always expressed in pairs such as Euro/ US Dollar( EUR/ USD) or US Dollar/ Japanese Yen( USD/ JPY) . The return for the investor is not in the value of the currency per se, but rather the relative exchange value of one currency against another currency. By simultaneously buying and selling pairs of currencies, or speculator, the investor, hopes to profit from a favorable exchange rate change. One strategy that the Forex investor uses is a technique that stems from the assumption that all information about the market and a particular currency s future fluctuations is found in the price chain. Unlike the American stock exchanges, the New York Stock Exchange( NYSE) and the National Association of Securities Dealers Automated Quotation System( NASDAQ) , Forex trading is more predictable than stocks. In other words, an investor simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before.

The investor can also anticipate such things as political unrest or change that will also have an effect on the market. Another strategy for the Forex investor is to analyze the country of the currency s economy, and other possible, political situation rumors. Forex is the largest financial market in the world handling between 5 and 9 trillion US dollars a day. Because of the the liquidity of the market, unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers. The combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors. What are the risks?

Also, with built- in protections such as safety margins, automatic limits for buying and selling, and other risk protection measures, the likelihood of ending up in the red even when the Forex market is volatile is drastically reduced. Because of the sheer scale of the Forex Market, it ensures greater price stability and greater leverage. Furthermore, because of its size, it is near impossible for a single investor to significantly affect the price of a major currency. While leverage figures of up to100: 1 are possible, without adequate risk protection in place the gap between profit and loss can be dramatic. However, all Forex traders should be aware that the market is one of the most liquid around and subject to strong currency trends. Even veteran Forex traders can be caught out from time to time and take large hits. With this type of investor speculation, the golden rule must be: don t risk more than what you can afford to lose.

Read more...

That S Why I( And Most Forex Traders) Continue To Fail - Finance and Currency Trading:

So why do a large number of Forex Traders eventually fail? On the day I started forex trading( years ago) , I thought that I would quite soon be in the money.

This Is Definitely What You Should Do In A Price Breakout - Morgan Fogel's Finance and Currency Trading blog:

Contracting bands warn that the market is about to trend: the bands first converge into a narrow neck, followed by a sharp price movement. A move that starts at one band normally carries through to the other, in a ranging market.

Forex Trading Has Been Around For A Long Time But Is Still Misunderstood By A Lot Of People - Victoria Edmunds about Finance and Currency Trading:

The foreign exchange market, has been very, or forex well known as the domain of government central banks and commercial and investment banks.