Online Forex Trading for Beginners

The foreign exchange market – better known as FOREX – is a global market for buying and selling currencies. It features a huge volume of transactions, 24 hours a day, five days a week. Daily transactions represent about $1.5 trillion (USD). In comparison, the average volume of the bond market in the United States is only worth $300 billion (USD) per day and the stock market about $100 billion (USD) per day. The foreign exchange market was established in 1971 with the abolition of fixed exchange rates. The value of currencies has become a “floating” value determined by supply and demand. The FOREX market has grown steadily during the 1970s, but with the technological progress of the 1980s, the volume of FOREX trading has risen from $70 billion per day to $1.5 trillion. The FOREX market is made up of about 5,000 commercial entities such as international banks, central government banks (such as the U.S. Federal Reserve), companies and brokers specialized in all types of foreign currencies. There is no centralized location for FOREX trading – the major exchanges are located in New York, Tokyo, London, Hong Kong, Singapore, Paris and Frankfurt, and all transactions are made by phone or online. Businesses use the market to buy and sell products in other countries, but most FOREX activity is generated by traders who use the exchange to generate profits from small market movements.
Even if there are many players in the FOREX marketplace, it is accessible to individual investors thanks to recent changes in regulations and forex and CFD brokers. Previously, the minimum size of a transaction was important and traders had to meet strict financial requirements. With the advent of Internet trading, regulations have been modified and minimum transaction size requirements have been reduced. Each lot has a value of about $100 000 and is available to individual investors who use leverage. Typically, lots can be controlled with up to 500:1 leverage, which means that 1000 USD will allow you to trade $500,000.
The advantages of Forex trading.
– Liquidity: Because of the size of the foreign exchange market, investments are extremely liquid. The supply and demand is extremely large in terms of volume. There is always a buyer or a seller for any currency. – Accessibility: The market is open 24 hours a day, five days a week. The market opens Monday morning Australian time and closes Friday afternoon New York time. Transactions can be done on the Internet from your home or office. – Exposure of the market: Currency fluctuations are usually caused by changes in national economies. Economic statistics greatly influence the Forex. – No commissions: Forex brokers make money on the spread “the difference between the purchase price and sale price” – There are no commissions. How does it work? Currencies are always traded in pairs – the U.S. dollar against the Japanese yen or the British pound against the euro, for example. Every transaction involves selling one currency to buy another, if an investor believes the euro will appreciate in value against the dollar, he will sell dollars and buy euros. The potential for profit exists because there is always movement between currencies. Even small changes can result in substantial profits because of the large amounts of money involved in each transaction.