Take a dinner with family or acquaintances, and mention your involvement in the Forex and you will get a few confused looks. Most people have no idea what it is Forex and how it works. The worst thing is that neither the majority of Forex traders, beginners, have any idea in what they are involved. Understanding what the market is makes a good first step toward successful trading.
Forex is the foreign exchange market where currencies are traded from various countries that have a value and constantly change. Most people know about the Forex as much as they need to make their own currency exchange when traveling outside the country for tourist reasons or shopping. When they did that, they were automatically part of the largest market in the world. Forex trading revolves over 3 trillion dollars a day, which exceeds the largest and best known stock exchanges / markets in the world.
How currencies have different values, logically is that there is a market that is setting this value. Where is a market, inevitably there is also speculation, but in this case market is extremely active. Bank deposits are sent around the world, corporations protect their own exposure to currency risk in different countries, central banks manage the national economic objectives through monetary policy, a huge investment funds make speculation. Not so long ago, it was the entire market, the domain of professional trader or a banker.
The word "market" usually gives the picture a shopping center, like New York or London, where he made the exchange of services and goods. This is not the case with Forex. Instead, the Forex works through what is known as the "interbank" market. Interbank is a nice way to say that banks trade among themselves, outside the central town market. This is one of the main reasons why the volume of data is not available for the Forex. This is also the reason why smaller investors and traders-individuals were set aside for so long.
In the nineties, a series of events led to Forex becoming available to small investors. Deregulation has led to the company's liquidity in the''retail'', where investors can take advantage of a huge speculative opportunity in the forex market. These ''dealers'' are offered a high leverage, low minimum deposits, and a new way to grocery store - 24 hours / 7 days a week.
Foreign exchange market, also called the "FOREX" or "the foreign exchange market" or "Retail Forex" or "FX" or "Spot FX" or just "Spot", is the largest financial market in the world, with more than 3 trillion dollars of trade volume on the day. If you compare it with the information that the volume of New York Stock Exchange 25 billion dollars a day, you can easily see what is really a big foreign exchange market. This is actually more than three times the total amount of all world markets stocks and options together!
That concludes the first lesson about forex, please keep on following my articles and I will soon include a new one.
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