|
FOREX trading involves the trading of currencies and until recently just banks and large financial institutions could trade it actively. However, now ordinary traders are taking advantage of it and have managed to make the FOREX market one of the largest financial markets in the world with a daily turnover of approximately $1.5 trillion. The FOREX market is estimated to be 30 times larger than all the US stocks markets put together. Further more, the FOREX market is open 24 hours a day.
The sheer size of the market is its first benefit. The FOREX market is extremely liquid and has a high volume. Liquidity is one asset that many traders are constantly looking for as this means a deal can always be made. Unlike the stock markets which are open for just 8 hours a day, the FOREX market is open for 24 hours. This allows the problem of gapping to be significantly reduced unlike the stock market where overnight events can cause the stocks to go up or down.
Currencies are always traded in pairs and usually most currencies are traded against the US dollar. The main pairs in the FOREX market are US dollar/Euro, US dollar/British Pound, US dollar/Swiss Franc, US dollar/Japanese Yen, US dollar/ Australian dollar, US dollar/New Zealand dollar, and US dollar/Canadian dollar. These pairs are known as the majors and currency traders have ample trading opportunities with these 7 major currency pairs.
The FOREX market is never bullish or bearish unlike the stock market. Currencies go up or down against each other based on how the world financial markets perceive the value of the currencies. Currency trading is done via FOREX brokers. They do not charge commission or brokerage. Instead, they make their money on the difference between the bid/ask spread.
There is no doubt that FOREX trading is an overlooked market because many traders do not realize how lucrative this market can be.
More Articles :
|
One of the most common methods of FOREX trading is to use basic analysis to determine which direction the currency will move. However, you can also take into account how supply and demand affect FOREX and accordingly make you pick. 
|