There’s Gold in Dem Dar Hills
The Forex market is one of the most interesting and potentially rewarding trading markets. Many different characteristics make it unique. While many traders are familiar with the stock market and commodities, these markets size pale in comparison to the dailyvolumes traded on the currency exchange markets, more commonly referred to as the Forex markets.
Forex markets are by far and away the largest trading markets in the world with a volume that is in excess of $6 trillion USD a day. No other comes remotely close to matching this sheer trading volume. Currencies are always traded in pairs, so a USD/JPY trade means US dollars are being used to buy Yen, while selling those positions means those Yen are used to buy dollars. During periods of world stress these markets are in a single word…WILD.
Although trading can be done with minor currencies, the majority of trades are from the eight “major currencies” of the U.S. Dollar, Canadian Dollar, British Pound, Swiss Franc, Euro, Japanese Yen, Australian Dollar, and New Zealand Dollar. Economic reports from these eight regions are important since those directly affect the price of each currency in relation to the others.
Forex market trades can be and often are heavily leveraged. This feature determined by your broker is what gives the opportunity for huge profits. Beware ;everage opens the door for impressively big losses as well. Normally in the Forex a trade is leveraged at 100 to 1 except in the USA where by law max leverage is 50 unless you can meet certain levels of liquidity. This means a single dollar of a traders capital for trading controls $1,00 of currency that’s being traded. This is how a change of .001 can lead to profits or loss – because the leverage can lure you like a siren’s song to Ullysses.
So who trades the currency market? The market is available and open for general trading, so anyone with an Internet connection can open up an account. Day traders are a prime example of individuals who trade the Forex. Many large banks and financial institutions participate as well. Soverigns like the G-20 nations and huge hedge funds move the markets
A word of warning: trading the Forex is different from trading commodities or the stock market. The combination of market volatility and leverage can be a very dangerous combination despite the opportunities that abound. Many traders , successful trading stocks and commodities ended up getting hammered when they tried to wade into the Forex without doing their homework.
The Forex is unlike any other market in the world. Not only is trading so wide spread across many different nations and currencies, but the market is active 24/7, six days a week. Forex might be relatively new to you on the scene when it comes to trading markets, but it’s not one to be taken lightly. It’s not one where you can rest on past laurels to carry you through. To be successful a trader has to be on top of his or her game for every single trade because one bad run can completely wipe out a position.
At the end of the day however there’s no denying that no market offers the opportunity of the Forex market. Seize the day join our community of traders.
