FOREX Trading - What is It? Is it Really For Everyone?

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FOREX Trading - What is It? Is it Really For Everyone?

by Wayne Wargo (PenWay.org)

FOREX (FOReign EXchange) is the largest global liquid financial market. According to various assessments, it is estimated that the amount of money in this market is over 4 trillion US dollars a day. Transactions are accomplished worldwide via telecommunications 24 hours a day when the market is open. Unlike the stock market in the U.S., The Forex market opens on Sunday at 5 PM EST and closes on Friday at 4 PM EST.

The U.S. and the U.K. account for more than 50% of the market transactions. The Forex major markets are in London, New York and Tokyo. Nearly two-thirds of the activity in the NewYork market occurs in the morning hours while European markets are open.

But why get into Forex trading anyway? Is it true that the huge potential profit gains we all keep hearing about are actually happening?

The following points are the prime reasons why the Forex market is one to consider:

* Unlimited Activity Compared to other markets that operate on only specific hours and days, the Forex market has an abundant amount of activity and opportunities during the week. Investors can react immediately to specific changes and trends that are happening in real-time.

* Freedom This also means freedom from normal office hours; traders can do business whenever they want. This freedom appeals to people from different lifestyles, locales and classes. You can place trades whether on vacation, poolside or wherever you'd like.

* Less Cost Forex has lesser trading costs. The traditional costs inherent within the normal stock market structure are not existent and you only need to be aware of the spreads, termed pips. You don't have to worry about broker's commissions. The spreads here are usually smaller than the spreads in other markets, and that means better profits.

* Leverage Unlike other markets where leverages are small, Forex trading allows for bigger leverages, giving you the chances to trade up to a hundred times your investment. This is a major feature of Forex. Brokers may also have features that allow a certain amount of leverage depending on the account. Of course, this also means a bigger risk of losing money. Risk management within Forex trading protects you from this.

* Stable Price Since your trade is done immediately, chances are the prices you were quoted online are the prices you will pay. Compared with other markets, where your transaction often takes a day or two, you may experience the price going down or changing. The stability and speed attracts a lot of traders to this market. In other markets, assets can be tied up for long periods, but the Forex market provides you with more control.

* Transparency Liquid, movable assets are easier to analyze and manage. Everything can be accessed by your platform and laptop. Your deals can be executed as per your viewpoint and strategy. This gives you a better feel of the market cycle, making your predictions more accurate each time you trade.

* Stable Profit Chances Since your trading involves only two currencies, and no other markets and trends are involved, one always has the opportunity for profit. The components of the watching of rising or falling of markets, goods and industries do not even enter into your decisions. Whether the market is bullish or bearish should not even be a concern. What really matters is that you have made the right choice in your currency selection to trade.

Forex trading is considered the perfect competition for logical reasons. Everyone has the same opportunity to make a profit. Even if one currency is falling, it just means that there is a currency rising somewhere and the opportunity of profit exists. An unlimited earning potential, the freedom, and the equal opportunity makes the foreign exchange market an exciting opportunity for anyone.