subject: Forex Training: The Lowdown On The Foreign Exchange Market [print this page] What is forex? What is forex?
Forex is a portmanteau for foreign exchange. It's the world's largest financial market, and brings in more than $4 trillion a day in trades. This financial market saw the beginning of its formation in the 1970s with the Bretton Woods Accord. This settlement was created to stabilize the world economy back then. It installed the US Dollar as the peg for all world currencies. This meant that the value of all currencies was determined based on the value of the American dollar.
Later on in the decade, European nations made a decision to move away from this and created the Smithsonian Agreement. This settlement, however, endured precisely the same fate as the Bretton Woods Accord; it failed. This then brought about a free-floating system. Meaning, no one currency was used as a peg for the other. Subsequently, currencies rose and fell unhampered. It's this variation that traders use on the forex market. Traders purchase and sell one type in hopes of building a profit from the other due to the value change.
As compared to the stock exchange, foreign exchange is the bigger of these two. Many people, however, are disillusioned into investing in the stock market due to its notoriety. Many people don't know that foreign exchange is a lot more helpful and is worth more. For instance, the New York Stock Exchange, the world's largest, brings in only $74 billion.
What are the great things about foreign exchange?
The first and greatest edge that a majority of people tend to forget is the fact that foreign exchange is open for 24 hours. This marketplace is seamless and operates 24 hours a day, except weekends. Brokers are able to open trading the minute Australia opens and remain on until it ends in New York. It's for this option that traders have the choice of forex day trading, swing trading, or position trading.
Forex day trading is when a trader is only active for a few minutes to a few hours. All trades are conducted within the day, and finish at the end of the day. Swing trading describes when a buyer/seller is in the marketplace for a few days to a couple of weeks. Position trading is the longest form of the three, where traders are in the market for months, to even years.
Because there are numerous buyers and sellers, it's rare that the market is monopolized. Apart from this, its size also provides for a larger liquidity rate. Which means that at the click of a button (seeing as trades are conducted online), a trader can get and sell instantly. Getting caught with a particular trade is sort of never an option because there will be another person ready to take the risk.
These are just a handful of the advantages of the system. Those who need to find out more about the system, the way it works, and other rewards can just use the web for forex training.
