What is FOREX???
Foreign exchange, commonly known as 'Forex' or 'FX', is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market. Forex is also considered the largest and most liquid market in the world.
WHY IT MATTERS:
Without this mechanism in place, foreign trade and investment would be hindered. Since many currencies abound along with a few major players like the U.S. dollar, the British pound, and the euro, this apparatus provides a clearinghouse to trade those major currencies.
HOW IT WORKS :
Foreign Exchange has no centralized market. Instead, a foreign exchange market exists wherever the trade of two foreign currencies are taking place. It is open 24 hours a day, five days a week. This foreign exchange market exists to ease investment and trade. All levels of traders, from central banks to speculators, trade currencies with one another.
For example: we examine one currency in comparison to a foreign currency. The Exchange Rate depends on the currency value relative to other nations such as; 1 US dollar is equivalent to 19 pesos.
Benefits and dangerous of Forex:
While the forex market may offer more excitement to the investor, one should keep in mind the risks are also higher in comparison to trading equities. The ultra-high leverage of the forex market means that huge gains can quickly turn to damaging losses and can wipe out the majority of your account in a matter of minutes.
This is important for all new traders to understand, since the forex market has large amount of money involved and the number of players, traders will react quickly to information released into the market, leading to sharp moves in the price of the currency pair.
However, the forex market is the only market opened 24 hours a day 5 days a week, so if you are a busy individual or have a full time job, it is an optimal market. Its also since the forex market is extremely liquid, margins are far smaller and the leverage is higher than equities. For example
What does FOREX stand for?
what is the average traded value of FOREX per day?
Where is the central market for foreign exchange?
What are the 4 FOREX shifters?
When is the FOREX market open?
What is the most popular currency traded?
FOREX is know for being the most what market?
Who is the largest global FOREX player
When was FOREX started?
Optimistic traders are known as? And downbeat traders?
Read more: Forex Tutorial: What is Forex Trading? http://www.investopedia.com/university/forexmarket/forex1.asp#ixzz4druZELtC
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