 | Dear ladies and gentlemen, |
What is "Forex"?
Basics Of Forex
As Forex (Foreign Exchange Market, FX
Market, including foreign exchange market, currency market) refers to
the global market, where currencies are traded.
The global
foreign exchange market is not tied to a fixed exchange location, but
is constituted by the worldwide network of interbank relations. It is
the largest financial market in the world (about $ 1.9 trillion daily
turnover), and thus both far larger and more liquid than the equity,
options and futures markets together.
The term "forex
trading" is therefore used for foreign currency trading. The
acronym itself stands for Forex Foreign Exchange.
The price of
a currency is determined by a global network of about 300 large
international banks.
Apart from the enormous liquidity of the
Forex market, the fact that you can trade almost continuously is
particularly attractive. Here is a short video: "What is Forex and how does it work?"
Trading times
The Forex market is almost "open"
around the clock. The trading period extends beyond 24 hours, and
more than 5.5 days a week, with a short break of 22 o'clock on Friday
to 23 o'clock on Sunday (Central European Time).
The trading
hours of the major financial centers of the world (New York, Tokyo,
London) each extend over 8 to 9 hours (Central European Time):
New
York opening at 14.00
New York closing at 23.00
Tokyo
opening at 1.00
Tokyo closing at 10.00
London opening at
9.00
London closing at 18.00
Although the forex market is
readily accessible (apart from the weekend), there are certain times
of the day on which the market (the courses) moves far more than
usual, which increases the chances of a successful
transaction.
Until the mid-90s of the trading on the Forex
market was (the minimum to open an account was at several million
dollars) with relatively high initial buzz possible and therefore
this market was only for banks, other institutions and big companies
reserved.
Through the Internet, it is now possible to open an
account with even the smallest amounts. Some brokers allow a minimum
deposit of only $ 200.
Do you know that companies like Nestle,
Toyota and many others are market participants, too? General Motors
made more profit in 2002 by Forex trading than by selling cars!
Why Forex? What are the advantages of the Forex market?
Compared to the stocks and futures markets, the Forex market offers a number of benefits, which are limited not only to the enormous liquidity.
No commissions - You pay no commission or additional charges. The only fix charges of a Forex transaction different resulting from the spread. (the difference between the bid and ask price).
Low transaction costs - The cost of a forex transaction (the spread) is about 0.1%.
No intermediary - You can trade with your broker directly without having to rely on the help of a third.
No fixed contract size - At the Forex market, you can (as opposed to the futures markets) determine the size of the position of your choice.
The Forex market is open 24 hours a day - It is possible for you to trade 5.5 days a week.
Leverage - By the use of leverage (in this case the ratio of debt to equity) you can trade with a relatively small margin a large position size. If your broker therefore offers a maximum leverage of 100:1, then you can deal with a guarantee of 10,000 euros a position size of 1 million euros. This gives you the possibility to minimize the risk of capital.
Daily trading volume is 1.9 trillion (Very high liquidity) - Through this enormous volume the Forex market is extremely liquid. The possibility that a single investor can affect the price of a currency over time is less.
Demo Trading, Charts and News Services Included - The so-called demo trading is an excellent opportunity to become familiar with the capabilities of the platform and to familiarize yourself with the market. All functions of a demo account are identical to those of a live account, but you have the possibility to trade with virtual capital. Many brokers offer in addition to the trading platform included charts and news services.
Immediate execution of orders - Through the Internet, it is possible to buy large items with one click or sale immediately.
Long and short transactions - You have to benefit on the Forex market by the possibility of rising and falling prices, so long positions and short positions are possible.
Mini accounts - It is possible to open a so-called Minikonto. This is an account with a low minimum deposit and minimum position of a small lot size, making it ideal to practice the action with real money and to become familiar with the market psychology without risking too much money.
The contents of the websites is only for information purposes and not an investment advice. Forex transactions are always risky transactions and not suitable for everyone. You should not invest funds, whose loss you can afford. Before deciding to trade, you should know all the risks associated with Forex trading.
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