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FOREX Means Foreign Exchange market. It is Usuall referred
as "Forex" or "Retail forex" or "FX"
or "Spot FX".
The currency trading (foreign exchange, Forex, FX) market
is the biggest and
fastest growing market on earth. Its daily turnover is more
than 4 trillion
dollars. The participants in this market are central and commercial
banks,
corporations, institutional investors, hedge funds, and private
individuals like
you.
What happens in the market?
Markets are places where goods are traded, and the same goes
with Forex. In
Forex markets, the "goods" are the currencies of
various countries (as well as
gold and silver). For example, you might buy euro with US
dollars, or you
might sell Japanese Yen for Canadian dollars. It's as basic
as trading one
currency for another.
Of course, you don't have to purchase or sell actual, physical
currency: you
trade and work with your own base currency, and deal with
any currency pair
you wish to.
How does one profit in the Forex market?
Obviously, buy low and sell high! The profit potential comes
from the
fluctuations (changes) in the currency exchange market. Unlike
the stock
market, where share are purchased, Forex trading does not
require physical
purchase of the currencies, but rather involves contracts
for amount and
exchange rate of currency pairs.
The advantageous thing about the Forex market is that regular
daily
fluctuations - in the regular currency exchange markets, often
around 1% - are
multiplied by 100!
How risky is Forex trading?
You cannot lose more than your initial investment (also called
your "margin").
The profit you may make is unlimited, but you can never lose
more than the
margin. You are strongly advised to never risk more than you
can afford to
lose.
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