what is forex

The Foreign Exchange Market commonly known as the "FOREX" or "FX" market is the larger financial market in the world. It trades an average volume of 1.9 trillion dollars per day; this is more than three times the combined daily average volume of the stocks and futures markets. About 5% of the daily turnover is from governments, corporations and fund managers doing business with foreign countries that need to exchange one currency for another, and the other 95% is from speculators who are attracted to the profit opportunities that volatile and changing market conditions create. As oppose to the stock and futures market were large traders can affect market behavior, the large volume of the Forex market make it hard to manipulate creating an easier and more stable market for small speculators to trade successfully. A multitude of economic forces impact the world's currencies. Some of the forces at work include interest rate differentials, domestic money supply growth, comparative rates of inflation, central bank intervention and political stability. In times of global uncertainty, some currencies may benefit from perceived "flight-to-safety" status. Or, if one country's economic outlook is perceived as strong by market forces, its currency may be firmer than another country's currency, where economic or political conditions are viewed with caution. In contrast to the world’s stock markets, The FX interbank market is a global network of the world's banks with no centralized location for trading, so it’s traded without the constraints of a central physical exchange. Transactions are instead conducted via telephone or online.

RISK DISCLOSURE

Forex trading has large potential rewards, but also large potential risk. Trading in foreign exchange is speculative and because of the unpredictable nature of the prices of currencies, the purchase or sale of currencies involves high degree of risk that is not suitable for all members of the public. You must be aware of these risks and be willing to understand and accept them in order to invest in the Forex market. Do not trade with money you can't afford to lose. Therefore, funds placed under management should be risk capital funds that if lost will not significantly affect one's personal financial well being.CTFC Rule 4.41 - Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over- compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are design with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.Agreement - The information contained in this site has been compiled in good faith, and in using it, the user agrees that the author and any other entities associated with this site shall not be liable for any direct, indirect, consequential loss arising from this usage, or the use of information and material on the Internet via web links from this site including, but not limited to errors, omissions, defects, interruptions, delays in operation, or transmission, computer viruses, or line failure, to the maximum extent permitted by law.

ADVANTAGES OF THE FOREX MARKET

– Forex is open 24 hours a day.– Forex is the largest financial market in the world.– You can trade with leverage, ranging from 100-to-1 up to 400-to-1. Without appropriate use of risk management, a high degree of leverage can lead to large losses as well as gains. – Trade more than 60 currencies with GFT. – No restrictions on shorting, which allows you to enjoy trading opportunities during any market condition.

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Currency Trading

Currency Trading, the biggest and most exciting market on earth, offers you countless opportunities!The Euro-US-Dollar rate is constantly changing, usually in small movements. Daily fluctuations around 1% are quite common. In Forex trading, when you invest with a 1:100 “leverage”, changes of, say, 1.2% turn to 120%, during a single day, even hours or minutes! You may profit unlimited amounts, but if the exchange rate moves against your favor, you lose not more than your initial investment.

Introduction to the Forex Market

The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with a daily average turnover of US$1.9 trillion.
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.
For speculators, we believe the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
A true 24-hour market from Sunday 5:00 PM ET to Friday 5:00PM ET, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.
The FX market is considered an Over The Counter (OTC) or 'interbank/interdealer' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.

The Benefits of Forex Trading

No Short Selling RestrictionsForex trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. There is no Zero Uptick rule or any other restriction against shorting a currency.
At $1.9 Trillion Per Day, Forex is the Most Traded Market in the WorldThe sheer volume of Forex helps to facilitates price stability in most market conditions. What's more, almost 90% of all currency transactions involve the 7 major currency pairs.
Trade on Your Schedule; Respond to Changes in the MarketForex is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. With three distinct trading sessions in the US, Europe and Asia, you can trade on your own schedule and respond to breaking news.