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The Basics of Forex Trading

The foreign exchange or forex market is a large global, decentralized market for the trade of currencies. This marketplace determines international exchange rates for each currency. It includes all parts of the buying, selling, and exchanging currencies in current or predetermined values. In this market, there is no physical location where trades are carried out, instead, trades take place at any time, anywhere in the world, with the use of electronic communication networks.

Forex is the largest financial market, after the stock market. Forex involves more trading than any other financial market, with a daily volume of over US$ 3.2trillion. One of the most important functions of force is to coordinate international exchanges. A forex quote is information provided by a foreign exchange quoting service that summarizes a particular country’s foreign currency exchange rate against another country’s foreign currency quote. In this market you can get current rates of exchange between two currencies, which is traded on one platform.

There are four major forex markets namely: Sydney, London, New York and Frankfurt. Each of these markets have several underlying markets, each interrelated with each other. You can trade in only one of the markets or both at any given time. The liquidity of the forex markets is immense as compared to stocks and commodities and hence you can make money from your investment in just a matter of seconds.

Forex deals with all major currencies and there is no limit as to how many currencies you can trade in. As far as the forex markets are concerned, gold is considered to be a safe investment. You can trade in all major currencies including: EUR/USD, USD/JPY, GBP/USD, USD/JPY. This way you will get exposure to the different currencies and their movements around the world.

The forex market is open for twenty-four hours, Monday to Friday. During the weekend hours the trading hours are kept open for business. There are also fluctuations in the forex market as compared to the stock and commodity market and this is because of the different foreign exchange markets being connected through the internet. Since the value of the currencies are always fluctuating and are affected by various factors such as political and economic events, it is very important to keep an eye on these currency values.

The Forex exchange is the largest and the most liquid exchange in the world and has close to four trillion dollars of trading turnover every day. It is believed that this amount is much higher than the proceeds made by the major financial institutions on their trading floors. You can use Forex trading strategies to try and earn more profits and this is possible only when you learn the basics of Forex trading. The Forex futures markets are a good place for beginners as they do not require too much money and there are many Forex brokers to help you out with Forex brokers ratings and Forex trading software which will give you a comprehensive view of the market.


Peter Conley

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