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The Forex Market explained! |
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The word Forex is an abbreviation for The Foreign
Exchange Market. This is the market in which all is bough and sold is money itself, which means that with certain currencies you can buy other kinds of currencies. It is the largest and most liquid financial market in the entire world. More than one trillion dollars exchange hands everyday on this market. It is a sea full of money with potential to make large and substantial profits. I explain on this article what Forex is all about and how it works.
When talking about the Forex Market the following questions arise.
1) How much money can I make at the Forex Market?
A lot, you can make a fortune!
2) Can I loose money at Forex?
Yes you do. In fact you can loose your entire portfolio just minutes after you start trading.
3) Is it volatile?
Yes it is. It is very volatile.
4) Is it risky?
Yes it is. It is very risky.
5) What is the leverage at this market?
The leverage is usually 100:1 on most firms but sometimes 200:1 and some firms offer up to 400: 1 leverage. This means that for every dollar that you have available for trading you can borrow up to 100 to trade. So with $1000 USD you can control $100,000 of currency. No other market gives you so much liquidity and so much leverage at the same time.
6) How did The Forex Market begin?
Currencies like dollars and sterling pounds were backed up by gold until 1971. After 1971 countries abandoned that norm and started to issue currencies as they pleased so the Forex market originated where central banks could exchange their home currencies for other country currencies. That ensured certain security for the banks in case their own currencies devaluated against the one they were exchanging it for. So if a bank sold dollars and bought sterling pounds and the dollar devaluated too much in relationship with the sterling pounds, the bank didn’t loose money, because they had bought large amounts of sterling pounds. Do not confuse Forex with the money exchanging business.
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The money exchanging business dates back to thousands of years ago. People exchanged one kind of coin for another, silver for gold, etc. Today we exchange one currency for another through The Forex Market.
7) Why did nobody know much about Forex until recently?
Until a few years ago only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty millions to start. Remember that this was intended to be used by bankers and multinational corporations not “little guys”. Forex was widely opened to everyone on the 90’s decade, a very few years ago. It is the number one market in many different aspects. It is the most liquid, largest and it is growing fastest than any other financial market in the world. It attracts many new investors because of its large leverage and low starting funding requirement. Some firms let you start with a mini-trading account which reacquires only $300 - $350 to fund your account and start trading.
8) How can I make lots of money on The Forex Market or how can I loose it all fast?
You can leverage your positions at 100:1. That means that if you start with $1,000 at full margin you can trade $100,000 of currency. Check this out. If you have $1,000 to trade and you want to buy euros for example, if the EUR/USD pair is at 1.32 and it rises to 1.33 in ten minutes you make a $1,000 profit in just ten minutes. You double your initial investment. But if you are wrong and the price goes down to 1.31 then you suddenly loose your entire investment. By just a 1-% change on the underlying you make a huge gain or a huge lost. Imagine that you are right on a long-term trade at 100:1 leverage and the pair change in value 20% favorably to you. If you traded $1,500 you would get around $30,000. This could happen in just one day, but at the same time if you are wrong and the market moves against you, you could loose your entire portfolio in 5 minutes. So you must be informed and you must know what you are doing if you want to make money on this market.
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Untitled Document
New York, March 10, 2010FXCM, ( www.fxcm.com ) one of the worlds largest online forex brokers, has introduced a beta version of its mobile trading platform.Available for iPhone, BlackBerry, and Windows Mobile phones, FXCMs mobile Trading Station II provides forex trading anytime and anywhere.* FXCM Mobile TSII gives traders the ability to keep track of their account ...
FXstreet.com (Sydney) – The JPY is reversing recent losses against the pound and is trading at 135.21. Earlier, the pair had opened at 135.54 and has been as high as 135.67. Since then, the pair has maintained upward tendencies in the hourly charts.
FXstreet.com (Sydney) – The EUR has reversed recent losses against the AUD and is trading at 1.4948. The pair also shows upward tendencies in the hourly charts. The EUR/AUD opened at 1.4911 and has been as high as 1.4961. The pair maintains support at 1.4755 and resistance at 1.5037.
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