FOREX Market
What is the foreign exchange market?
If you happen to be new to the FOREX market you may be surprised to find out that it is the largest financial market in the world. Approximately $1.5 trillion is turned over daily in this market. This is a huge number and it dwarfs the combined dollar volume of the NASDAQ and NYSE. Some of the largest companies and banks from around the world trade in currencies from various countries to create a balance as some are going to gain money and others are going to lose money. The basics of FOREX are similar to that of the stock market found in any country, but on a much larger, grand scale, that involves people, currencies and trades from around the world, in just about any country.
The currency rate of different countries change every day. The value of the dollar, for example, may be worth more or less Swiss Francs from one day to the next. Due to the tremendous amount of leverage available to the FOREX trader you have to watch your trades closely or you could lose large amounts of money. The main FOREX trading locations are Tokyo, London, and New York, but there are also many other locations around the world where FOREX trading takes place. The most heavily traded currencies are (in no particular order) the Australian dollar, Swiss franc, British pound, Japanese yen, Eurozone euro, and the US dollar.
The locations where FOREX trading takes place will open and close, and then the next location will open and close. This is seen also in the stock exchanges from around the world, as different time zones are processing orders and trading during different time frames. The results of FOREX trading in one country could have results and differences in what happens in additional FOREX markets as the countries take turns opening and closing with the time zones. Exchange rates are going to vary from FOREX trade to FOREX trade, and if you are a broker, or if you are learning about the FOREX markets you want to know what the rates are on a given day before making any trades.
Every currency traded in the FOREX market has a three letter code associated with that currency so there is no misunderstanding about which currency or which country one is investing with at the time. The euro is the EUR, US dollar is known as the USD, British pound is the GBP, Swiss franc is the CHF, Australian dollar is AUD, Canadian dollar is CAD, and the Japanese yen is known as the JPY.
If you, as an individual want to be involved in FOREX trading, you must get involved through broker, or a financial institution. Individuals are also known as spectators, even if you are investing money because the amount of money you are investing is minimal compared to the millions of dollars that are invested by governments and by banks at any given time. This does not mean you can’t get involved. Your broker will be able to tell you more about how you can be involved in the FOREX market, chances are that they have FOREX software that will aid you in making trading decisions. In the US, there are many regulations and laws in regards to who can handle FOREX trading for US citizens so if you are searching the internet for a broker, be sure you read the print, and the information about where the company is located and if it is legal for you to do business with that company.