The Forex market is the most exciting and dynamic market. With multi trillion USD traded every day, it is also the largest financial market in the world.
Forex (or FX) stands for ‘foreign exchange’ but is also referred to as ‘currency market’. If you ever exchanged USD to another currency then you participated in a Forex transaction.
The Online forex market is, however, mainly speculative, which means that you don’t take possession of the actual, physical currency. Rather, you open and close deals and make either a profit or loss from currency movements which gets reflected in your online account.
The forex market is an over-the-counter (or OTC) market which means that trading takes place directly between two parties without dealing through an exchange. This means you can conveniently access the market online anywhere in the world.
Accessibility – It’s no wonder that the Forex market has the trading volume of multi trillion USD a day – all one needs to take part in the action is a computer or a mobile device with an internet connection.
24 Hour Market – The forex market is open 24 hours a day, five days a week, so that you can be right there trading whenever and wherever.
Narrow Focus – Unlike the stock market, the forex market revolves around more or less eight major currencies. A narrow choice means less confusion, so even though the market is huge, it’s quite easy to get a clear picture of what’s happening.
Liquidity – The forex market is most liquid market in the world, which basically means that you can buy and sell currency as you please. The big advantage of liquidity is that you can always find demand to sell or buy. Exchange rates move fast and every second and conditions can change at any time in response to real-time events. While you must be aware of the risks such changing markets can pose, remember that volatile markets also offer high profit opportunities.
Increased leverage – Leverage is when you ‘borrow’ money so that you can use a small investment to get a greater yield. With forex, 100:1 and higher is common. This means your opportunities for gain are greatly enhanced. Remember thought that your risk increases too.
Controllable risk – Forex traders set a stop loss which means you set the maximum amount you are prepared to risk.