How to Start Trading the Forex Market, Part One
The Foreign Exchange market (also known as the Forex market) is the largest financial market in the world, with over $3.98 trillion dollars changing hands every day. That is larger than all US equity and Treasury markets combined!
Unlike other financial markets that operate at a centralized location (for example, the New York Stock Exchange), the worldwide Forex market has no central base of operations. It is a global electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of currencies. Another major benefit of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world: Sydney, Australia, Tokyo, Japan, London, England and finally New York in the United States. At any given time, in any location, there are buyers and sellers, making the Forex market the most liquid one in the world. As an example, you are no longer restricted to trading only during the hours of the New York Stock Exchange or the London Exchange.
For many years, the Forex market was only accessible by banks and other large financial institutions with millions and millions of dollars to invest. With advances in technology over the past few years, however, the Forex market is now available to everyone: from banks, large financial groups and commercial money managers to individual traders trading small, private accounts.
Whether you know this or not, you are already a participant in the Forex market! Your purchases of bonds, stocks, or other investments, along with money deposited in your bank account, represent investments that rely heavily on the value of their denominated currency. Due to the changing value of the US Dollar and the resulting changes in exchange rates with other currencies, your investments will fluctuate in value. Considering this, it should not be a surprise that many investors have taken advantage of the ever changing exchange rates, using the volatility of the Foreign Exchange market as a way to increase their capital holdings.
The Forex market enjoys a key role in world economy and there will always be a need for the exchange of currencies. International trade will only continue to increase as technology and communication methods become faster and more accessible.