FOREX

FOREX is known as the top place to trade currencies .Because of this ,forex has become one of the largest liquid markets in the world. There is over $5.4 trillion traded per day in the forex market. And the best part of all this is that the trading is conduced OTC or Over- The- Counter In other words you get to do it in the comfort of your own home or anywhere there is an internet connection. Historically speaking only large financial institutions , corporations ,central banks ,hedge funds and extremely wealthy individuals had the resources to participate in the forex market .However ,now, with the emergence and popularization of the internet and mainstream computing technology ,it is possible for average investors to participate. Anyone can learn forex since anyone can be an investor and the forex market provides plenty of opportunity for investors. However, in order to trade profitably in this market ,currency traders have to take the time to learn about forex and dedicate enough time to practice what they have learnt ,it can be risky not knowing what to do and risking all your capital which may be a substantial loss . Most people are confused about this form of investing into the currency markets. So what is forex? ,is it legit? Or is it just a scam? Or a fly by night? Well Forex stands for foreign exchange, which is exchanging one currency for another. You sell a currency and buy another currency simultaneously, and once you do so you have involved yourself in the forex market. For instance, if an American were to visit London, they will have to sell their dollars (USD) to buy British Pounds (GBP),another example, Imagine a situation where the U.S dollar is expected to weaken in value relative to the EURO .A forex trader in this situation will sell dollars and buy euros .If the euro strengthens the power to buy dollars has now increased .The trader can now buy back more dollars than they had begin ,with making profit. The foreign exchange market, known as "forex" or "FX," is the largest financial market in the world. If you were to compare it with the volume traded in New York Stock Exchange (NYSE) which is about $74 billion volume of stock a day, the foreign exchange market looks absolutely ginormous with its $5.4 TRILLION a day trade volume. For the mere fact that you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country, like buying stocks of a company. The price of the currency is a direct reflection of what the market thinks about the current and future health of a particular country’s economy. For instant when buying the Great Britain Pound, you are basically buying a "share" in the Britain’s economy. You are betting that the Britain economy is doing well, and will even get better as time goes by doing a technical analysis, using our pretested and well established indicators to better the chances of the anticipated outcome. Once you sell those "shares" back to the market, hopefully, you will end up with a profit. In conclusion, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to other countries' economies. This is similar to stock trading. A stock trader will buy stock if they think its price will rise in the future and sell if they think its price will fall in the future. Similarly, a forex trader will buy a currency pair if they expect its exchange rate will rise in the future and sell a currency pair if they expect its exchange rate will fall in the future. Each forex transaction involves two different trades,The purchase of one currency and the sale of another that is why forex quotes are quoted as a combination of two currencies, which is known as a currency pair. The most heavily followed and traded currencies are USD,EUR and GBP. When you look at a currency quote You will notice that all currencies are quoted in a pair .Example: USD/CAD or USD/JPY .When you buy a currency you are selling a different one as well. . Exchange rates tell you how much you will pay/receive if you buy /sell the “base” currency. Standard format example EUR/USD=1.987.In this example, the currency to the left of the slash (EUR) is referred to as the base currency, and the currency on the right of the slash (USD) is the quote or counter currency . The base currency (in this case, the EUR) is always equal to one unit (in this case, EUR=1), and the quoted currency (in this case, the USD) is what that one base unit (EUR) is equivalent to in the other currency (USD). This example quote shows that if you want to buy EUR1 (eur), you would have to pay 1.987 USD or if you wanted to sell EUR1, you would receive 1.987USD. Another Example… USD/JPY=1.6589 USD=BASE CURRENCY JPY=QUOTE/COUNTER CURRENCY USD=$1 Because it is the “BASE” This example quote shows that if you want to: BUY USD$1,you would have to pay 1.6589JPY SELL USD$1,you would receive 1.6589JPY