Although perhaps not as well known as some other markets, the Foreign Exchange (or Forex) market is the largest securities market in the world. Actually, if you combine all of the other markets in the United States together, Forex is 30 times bigger than even that. On average 2 billion dollars are turned over every day in Forex trading. Clearly, then the Forex market is something we should be interested in taking a closer look at.
I am sure you are familiar with the stock exchange where people buy and sell shares in companies. Forex also involves buying and selling but in global currencies rather than stocks. A trade in Forex will involve selling one countries currency in order to buy another's. For example, I may believe that the Euro is going to strengthen and so I sell some of my US dollars to buy some Euros.
In the stock market, the shares of hundreds of different companies are traded on a daily basis. With Forex, the situation is a little bit simpler in that around 85% of the daily trading involves a small set of major currencies. These are the US Dollar, British Pound, Euro, Japanese Yen, Swiss Franc and the Canadian and Australian Dollars. These currencies are the most liquid which means there should always be a buyer available to accommodate a seller and vice-versa.
Trading in Forex begins in the morning in Sydney and progress across the world over a period of 24 hours before arriving back to start again in Sydney the next morning. This is a further benefit of trading in Forex as traders are able to take advantage of any important fluctuations and changes at any time of the day.
Andrew McNaught is a successful webmaster and publisher of Forex World Online where you can find out everything you need to know about Forex trading.
Written By: Andrew McNaught
