|
The word Forex is derived from Foreign Exchange and is the largest financial market in the whole world.
The FOREX has a DAILY trading volume of around $1.9 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets. This means that 1,898,574 skilled traders could each take 1 million dollars out of the FOREX market every day and the FOREX would still have more money left than the New York Stock would have daily!
The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so that a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollars.
The currency (foreign exchange) market is the largest and oldest financial market in the world. It is also called the foreign exchange market, or "FOREX" or "FX" market for short. It is the biggest and most liquid market in the world, and it is traded mainly through the 24 hour-a-day inter-bank currency market - the primary market for currencies. The Forex market is a cash (or "spot") inter-bank market. By comparison, the currency futures market is only one per cent as big.
Foreign Exchange simply means the buying of one currency and selling another at the same time. In other words, the currency of one country is exchanged for those of another.
The currencies of the world are on a floating exchange rate, and are always traded in pairs - Euro/Dollar, Dollar/Yen, etc. In excess of 85 percent of all daily transactions involve trading of the major currencies - Australian Dollar, British Pound, Canadian Dollar, Japanese Yen, Swiss Franc, and the U.S. Dollar.
Unlike the futures and stock markets, trading of currencies is not centralized on an exchange. Forex literally follows the sun around the world. Trading moves from major banking centres of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S.
In the past, the Forex inter-bank market was not available to small speculators due to the large minimum transaction sizes and often-stringent financial requirements. Banks, major currency dealers and the occasional huge speculator used to be the principal dealers. Only them were able to take advantage of the currency markets fantastic liquidity and strong trending nature of many of the world's primary currency exchange rates.
Today, foreign exchange market maker brokers are able to break down the larger sized inter-bank units, and offer small traders the opportunity to buy or sell any number of these smaller units (lots). These brokers give virtually any size trader, including individual speculators or smaller companies, the option to trade the same rates and price movements as the large players who once dominated the market. Market makers quote buying and selling rates for currencies, and they profit on the difference between their buying and selling rates.
Forex has been voted the best business in the whole world by Forbes magazine, and that is why great American companies like Nike(TM), Dell(TM), Daimler-Chrysler(TM), Bank Of America, most all major banks, George Soros, Warren Buffet, hedge funds, major corporations, and many small traders, are all trading the $1.979 trillion dollar a day Forex Trading markets.
More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds & commodities and building their fortunes in the foreign exchange (FOREX) marketplace.
Here are 7 important reasons why:
1): FOREX is the largest financial market in the world.
With a daily trading volume of over $1.5 trillion, the spot FOREX market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with
the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite trading liquidity and flexibility.
2): FOREX is a TRUE 24-hour market.
The FOREX Market never sleeps. Trading positions can be entered and exited at any moment - around the globe, around the clock, six days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24- hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.
3): There is never a Bear Market in FOREX.
You can have access to a seamless, mutually-inclusive (two- way) exchange of currencies. Meaning, because currencies trade in "pairs" (for example, US dollar vs. yen or US dollar vs. Swiss franc), one side of every currency pair (for example, USD/JPY - JPY = YEN) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential to profit in both a rising or falling market.
4): High Leverage - up to 200:1 Leverage.
You are permitted to trade foreign currencies on a highly leveraged basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000- unit currency lots can be traded with as little as 1% margin, or $1,000. Futures traders, who are accustomed to margin requirements generally equal to 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, there's no comparison. If you're looking for an efficient use of trading capital, this is it!
5): Price Movements Are Highly Predictable.
Although currency prices in the FX market may be volatile, they generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies.
Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as
a result, the market frequently overshoots and then corrects itself. As a technically trained trader, you can easily identify new trends and breakouts, which provide for
multiple opportunities to enter and exit positions.
6:) Commission-free Trading and Low Transaction Cost
When you trade FOREX, through many brokers you'll do it totally commission-free! These brokers don't charge
commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume.
This is worth repeating: No FX commissions!
What about trading fees? There are none of the usual fees to which futures and equity traders are accustomed – no exchange or clearing fees, no N_F_A or S_E_C fees. Because
currencies trade over-the-counter (OTC), via a global electronic network -- in FOREX, what you see is what you get, allowing you to make quick decisions on your trades
without having to worry or account for fees that may affect your profit/loss or slippage.
In the equities markets, you must pay both a commission and exchange fees. The over-the-counter structure of the FX market eliminates exchange and clearing fees, which in turn
lowers transaction costs.
So, if FOREX brokers don't charge commissions, how do they make money? Like all traded financial products, over-the-counter currency trading involves a bid/ask spread, which
represents the prices at which your counter-party is willing to trade. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during after-hours trading.
7): Instantaneous Order Execution and Market Transparency.
Market transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised (like in the Enron scandal), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news,
is easier than for publicly held companies).
Because of this transparency, FX trader will be able to exercise risk management strategies in accordance to the fundamental and technical indicators.
The FX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.
In the forex world, order execution is all-electronic and because you'll be trading via an Internet-based platform, instantaneous execution is routine. There are no physical
exchanges, no traditional open-outcry pits, no floor brokers, and consequently, no delays.
In conclusion let’s hear what Forex traders say about Forex:
"If you think what you do is exciting, you ain't seen nothing yet. I'm an FX Trader".
"Trading FOREX is like picking money up off the floor. NOT trading FOREX is like leaving it there for someone else to pick up."
"It's like having an ATM machine on your own computer."
www.rapidforex.com
I trade for a living. There is no better way to make a living. Well, maybe being the Emperor of Rome would have been nice, but that job is no longer available.
Rob Booker.
www.robbooker.com
It's the BEST BUSINESS Opportunity, not to mention TRADING Opportunity, of ALL TIME - BAR NONE!! NO employees. NO marketing or advertising. NO products to create, buy or sell. NO customers, customer service headaches, or database management. NO store needed. NO website needed. NO hassles with people, products, or marketing. It's just you and your computer!
Brian Ault www.Forex-Currency-Trader.com.
|
