What is The Foreign Exchange trades market (also known by the acronym FOREX) is sometimes called the Spot market. Every day the value of trades made on Forex is anything up to $2 trillion. There are no physical goods or stocks traded in Forex: the currency is, quite simply, hard cash money.
Traders in the Forex market buying one currency at the same time as they are selling another, using a Forex broker to make the trade. This paired form of trading means you might be selling US Dollars (USD) at the same time as you are buying GB Pounds (GBP). The trading of currencies is a barometer of current confidence in a country and its economic prospects. The strength of one currency is a demonstration of its position against other competing nations' economies.
Newcomers to Forex might want to know where the hub of the market is situated: the answer is - it has no physical location. The Trading in the Forex market operates electronically through the Interbank network. Unlike other markets, there are no opening or closing prices on Forex, as the market runs 24 hours a day, from Sundays to Fridays.
It is now easy for any individual to start trading in Forex as the high entry thresholds, which served to restrict Forex trading to financial institutions, no longer apply. No longer do you need to have millions of dollars to enter this market, so individuals can start trading online from their homes.
Unlike traditional stock markets, there are no commissions payable to brokers: they receive a bid-ask payment instead. The bid-ask spread value varies: usually 0.1 per cent of much lower depending on the dealer and the lot or contract size.
Why is Forex trading becoming more popular with private investors?
Here are some of the attractions of getting involved in Forex trading:
You pay no commissions, clearing fees, exchange fees, government fees, or brokerage commission.
You deal direct in your chosen currency market, you cut out the middle man.
The minimum trade is low, so it is easy to start trading in Forex.
Transaction costs are not excessive.
The market is open 24 hours a day between Sunday evening and Friday afternoon so you can star Forex investing even if you have a full time job.
Traders compete on equal terms because nobody can corner this vast market.
Huge capital reserves are not necessary, and investor can start with less than $1000.
Your investment is instantly available so your money is not tied up if you need it.
How you can get started in Forex trading from home
All you actually need to get started is a computer with a high-speed Internet connection. Most of the reputable Forex trading sites have helpful step by step instructions to help you, and you can even start out with 'dummy' trades where you do not even risk any of your own money.
The cost of trading in Forex
You can open an account with a deposit of around $250 in your account - this is called your margin. To get a true feel of the market, it would be better to allocate around $1000 if you can afford it - remember you should only deposit this money if you are ready to risk losing it!!
How you can make money in Forex trading
The key is to buy low and sell high, of course - but easier said than done. Any currency that is fluctuating is a potential candidate for a trade, and you can profit well from a change as low as one per cent in the value of a currency.
How you can get started Have a look at any of the major Forex websites on a Business Opportunity Review website where you can check how they are rated, deposit your initial margin and you are ready to become an international Forex Trader. Think of me when you make your first million.
Adrienne Davis runs Forex Trading Help with advice on the risks and rewards of Forex Trading. She has extensive experience in marketing and business start up and publishes a FREE Internet Business Tips Ezine
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