What is Forex?

What is Forex
What is Forex

The monetary market or Forex  (Forex comes from Foreign Exchange) is the biggest and most liquid financial market in the world with a daily changing hand round 1.9 trillion dollars.

Years ago the currency trading was dominated by the big commercial banks, financial institutions, funds, as well as central banks. The Internet distribution during the last few years gave the opportunity for the ordinary investor to act in this market, as all he needs is a computer and connection with the global network.

The unique part of this international market is that there is no a centralized location where the trade has been performed. It is enacted electronically, which means that all transactions are realized by the computer network spread through the world.

The market is open 24 hours a day, five and a half days a week, as even some institutions and market-makers give the opportunity for opening and closing  positions during the weekend.

The high liquidity, the possibility of big leverage and the easy access to the market from each point of the world let to a boom of the ones willing to trade. The positions could be open only for a minute bringing a quick profit (as well as loss) for the traders.

The currency rates usually vary with less than 1 % for a day but don’t let yourself be misled. On this market the leverage that you can use reaches 500:1, i.e  for every 1000 units in your account, you may open a position up to 50 000 . Of course, using such a big leverage is extremely risky, even insane.

The different online agents offer different conditions for trading, as we start from spread (the difference between the buying and selling price), the leverage (from 20:1 up to 500:1), the interest that is charged to the positions hold for more than a day (the so-called SWAP) and etc.

A basic advantage in trading is that there are no commissions, as the rate that the traders pay is the difference between the quotes buy/sell, offered by the broker. Regarding SWAP, the brokers have different policy on its determination, as well as the charging itself.

At first sight everything looks easy – there are two buttons in front of you – sell and buy. But the statistics show that the biggest part of the newcomers in this market draw back during the first year when they lose their money that have invested.

If you want to trade successfully on this market you need knowledge and a lot of experience. In following publications we are going to show some different aspects considering the currency market , as well as useful information for the beginners.

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