The Foreign Exchange Market or best known as Forex or FX Market, has become the world’s biggest financial market, with a daily turnover of about 3.2 trillion USD$. It’s a market where anyone can trade, from central and commercial banks to private individuals like you or me. The basics of this market like any other market is to trade items or objects, the thing is, that in this market those “items” or “objects” in trade are the currencies of various countries.
The particular feature of the Forex Market, is that people profit from the fluctuations in the currency exchange. Also, another particular thing, is that unlike other markets, FX Market, does not requires physical purchase of the currencies, but rather involves contracts for amount and exchange rate of currency pairs.
The objective of currency trading is to exchange one currency for another hoping that the fluctuation of the market will be such that the currency you bought increases its value in relation to the one you sold.
The Forex Market is maybe the best market for financial traders because of it’s characteristics:
High Liquidity: this means there will always be circulating money. In this way, traders can trade any currency at any time they feel like, all this, because someone will always be trading, selling or buying any currency he wants, which makes the market extremely appealing for financial traders.
Market Transparency: FX Market offers to any trader the ability to observe the information of every trading process, giving great advantages to the market participants. Because of this, traders can study the market and employ pre-meditated strategies to get the best of it.
Low Transaction Costs: Transactions in the Forex Market costs zero or very close to it. This is because in the FX Market, traders deal directly with the market maker, which eliminates ticket costs and middlemen.
Trending Market: Forex Market is cyclic, it goes up and down, making it easier for financial traders to analyze it’s statistics in order to anticipate the direction of future prices.
Leverage: FX Market offers the participants the ability to borrow funds for investment. Leverage is also called investment ratio to actual value.
24/5: Forex Market offers to the participants the ability to trade all day long, 24 hours, all the five days of the week, except weekends, from any city of the planet.
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