What Is This Thing Called Forex?

by : James Hunaban

Forex trading is certainly becoming popular with currency traders. Although Foreign exchange trading can be confusing for newbie's the market still lures many people in because it has numerous advantages when compared to other types of trades. Forex trading is somewhat different from stock exchange markets and there are opportunities for those who take part in it. So let's answer the question - what is this thing called forex?

Foreign exchange trading or forex is the term used to describe the trading of the various currencies in the world. There is a special market for this called, unsurprisingly, the forex market. This trading does not happen at one location but through use of the telephone and networks, although there some main trading centres in major cities all over the world. The idea of forex trading is to buy one currency while at the same time selling another, so of course you must keep up to date on currency exchange rates. There exist several common currency combinations designed to get the most out of a trade.

These common exchanges are termed a cross. Here are two common terms that can help anybody who is starting out in forex trading. The term pips refers to the least amount a cross price quote can alter. The term spread refers to the price difference between the selling and buying price of the currency in question. As with anything in life that is worth doing it can take a fair bit of time and effort to learn thoroughly but it can be a fun ride.

The forex market is open 24/7 and is always busy with buyers and sellers almost always available, thanks to the telephone and other forms of electronic transmission. Forex trading, like other forms of trading, is a skill which has to be learnt. It takes a good deal of knowledge and concentration to prosper on the forex market, but the advantages entice many traders to invest in it.

Forex or foreign exchange trading is the world's largest trading market and the reason for this is the fact that it offers much more to buyers and sellers than any other market is able to. In the currency markets prices will rise and fall but they do not vary as much as they do in the stock market thus the foreign exchange market is stable when compared to other markets. If this is all new to you, I would suggest you get out there on the net and get researching the wonderful world of forex.