A Few Forex Basics

By: James Hunaban

The term Forex is short for foreign currency exchange market, and it refers to the direct trading of foreign currencies. Forex is actually a virtual network of currency dealers who are connected by means of telecommunications. This interbank market was originally created in 1971 when international trade changed from fixed to floating exchange rates. The Forex market is open 24 hours a day and the currency exchange operations are continued through working days of the week.

Forex is a worldwide market, so when you are sleeping in the United States, dealers in Europe can be trading currencies with their Japanese counterparts. It is the largest financial market in the world, with the equivalent of over $3-4 trillion changing hands every day whereas traded volume on the stock markets is only 500 billion US dollars. Forex is part of the bank-to-bank currency market which is known as the 24-hour interbank market.

Forex trading is becoming more popular every day and it is an exciting and fast-growing marketplace. Transactions are conducted within seconds online and the markets move quickly and take new directions all the time. Forex markets are not based in one place meaning there isn't some large building on Wall Street where a load of people shout and waive dollar bills in an effort to get other people to buy them. Trading System Software to help investors in the foreign exchange market has been around for a long time, but just recently it has become extremely popular.

Trading Forex has become really accessible for the private investor because of the World Wide Web, and can be a recession proof business, but it must be noted that Forex is not a means of getting rich quick and executing foreign exchange orders with this aim in mind could well end in financial hardship. Trading in online Forex means that when you are investing in foreign exchange, you are buying one currency and at the same time selling another currency. Trading occurs over the telephone and through computer terminals at thousands of established locations, as well as within home-based trading businesses worldwide.

This article contains fairly basic information, but then I am sure there are many people in the world who don't even know what Forex is, so I haven't gone into any complex strategies here. In the foreign exchange trading markets there is always a risk that a trade will turn against you, and I must stress that the best way to learn the Forex market is to get some experience with live hands on trading. The single best way to learn how to trade in the Forex markets is to have a go.

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