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Foreign Currency in the Forex Markets

Forex is short for foreign currency exchange and it is very liquid and is the world’s biggest market for trading foreign currency. The forex market has been around since 1971 where large companies and a few very wealthy investors were only able to practice forex trading. With the advent of the internet, however now anyone with access to the internet and a meager amount of money can participate. When identifying foreign currencies you will see them with a three letter code, where the first two letters stand for the country and the last letter identifies the nation it represents. There are currently seven major currencies on the forex that are the most heavily traded. These include the U.S. Dollar (USD), Euros (EUR), Japanese Yen (JPY), UK Pounds (GBP), Swiss Francs (CHF), Canadian Dollars (CAD), and the Australian Dollars (AUD).  There are many advantages to fx trading. Below is a list of advantages as seen by most forex traders. 1)  The forex market is open 24 hours, 7 days a week around the clock, which is not the case when trading stock. You can also trade from just about anywhere as long as you have either a computer with high speed internet, or access to a phone.2)  Forex traders can be profitable in any conditions when foreign currency trading whereas when playing the stock market, stock prices must rise in order to make a profit.  Forex trading can make a profit no matter how the economy is doing. 3)  Investing in stock and other types of investments typically require and investor to set aside a large sum of money.  When trading currency, you can use as little as $300.00 to set up a small account that will let you trade in amounts of 10,000 units. 4)  Forex currency trading can be done using borrowed capital. This means that you don’t need hundreds of thousands of liquid assets to trade currency in large numbers. You can practice margin trading where a small amount of your own capital can be used to leverage a large chunk of borrowed assets, which can then be invested. 5)  Forex trading also does not require you to pay commissions to a stock broker.  The dealers in forex trading instead receive part of the spread between the buying and selling price of a foreign currency. This is generally a fraction of a percent so it is a very small amount per trade.6)  Unlike the stock market, it is close to impossible for any individual or company to manipulate the forex market due to the volume of trading that takes place each day.  As you can see there are many advantages to trading foreign currency that are missing when trading in the stock market. Forex markets have different regulations and terminology but the same overall principals apply.  You must stick to your trading plan, and perform technical analysis. If you are interested in learning how to conduct currencies trading, check into online resources and be sure to read a lot books about forex currency trading for beginners.

 





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