The foreign exchange currency market is the largest financial market in the world. It has an average volume of about $2 trillion a day, dwarfing the $25 billion a day in volume traded on the New York Stock Exchange .
Also referred to as "Forex" trading, foreign exchange currency trades involve the simultaneous buying of one currency and the selling of another. Currencies are traded in pairs. For example, you may trade the Great British Pound and the US dollar (GBP/USD) pair or the British pound and the Japanese Yen (GBP/JPY) pair.
In effect, you are buying the currency of a particular country. This equates to taking a position in that nation's economic growth. The price of the currency is a direct reflection of what the market thinks about the current and future health of that nation's economy. If you buy the Japanese Yen, you are in effect buying a share in the Japanese economy with the belief that their economy will expand in comparison to the economy of other counties.
The Forex has no physical exchange or central market. Instead, it is an Over-the-Counter (OTC) or 'Interbank' market. The entire market is run electronically, within a network of banks.
The market is available continuously open. This 24-hour market is achieved by a transitioning of trading activity around the globe. Trading begins in Sydney, Australia, then shifts to Tokyo, Japan. Next, London, England takes over and then "passes the baton" to New York. As New York shuts down, Sydney is opening for business.
The Forex market was not intended for retail traders. The original intent was to provide a currency exchange between banks and large institutions. In fact, prior to the late 1990's, only these "big boys" could participate in the foreign exchange currency market. An initial capital requirement of $10 to $50 million was required, and there were other obstacles preventing the average person from trading currencies.
With growing reach of the Internet, online Forex trading firms began to offer trading accounts to 'retail' traders. With reduced capital requirements and online access, all that is needed to get started is a computer, a high-speed Internet connection, and an understanding of the Forex market and how to trade it profitably.
The Forex market comes with a series of additional benefit, which make it irresistible to traders. There are only seven major currency pairs. Compare that to tracking thousands of stocks. There are no commissions or exchange fees. Your broker simply makes their money from the difference on the bid / ask spread. This is also the most liquid market anywhere.
There are other benefits, but you probably have an idea as to why currency trading is quickly growing in popularity with retail traders. The obstacles to accessing these benefits have been largely eliminated, with knowledge the only barrier between you and forex trading profitability.
Fortunately, the need for education is being addressed. If you wish to learn more about the basics of how the foreign exchange market works, you will find numerous resources on the Internet and can access reliable information from reputable Forex brokers. Once you understand the basics and choose to take the next step, you will want to invest in a solid trading course from a reputable source.
With good instruction, there is very little that stands between you and the ability to benefit from trading the foreign exchange currency market.
You may download a complimentary copy of our extensive, special report on the Forex market and learn more about the risks and benefits of foreign exchange trading. We also reveal why the trading methods detailed in the Forex Profit Accelerator course are the most powerful documented Forex trading techniques available to the public.
