The word Forex is simply made up of the first letters from the words Foreign Exchange so it is a short way of saying foreign exchange trading. It may also be written as FX, and it is often called currency trading. It involves buying and selling different world currencies according to whether you think they will rise or fall in value.
This may sound like it would be a difficult thing to do, but there are many systems available that can help you to identify signals and trends indicating that the price of a currency pair is likely to move in one direction or another. There are even automated forex trading systems, otherwise known as forex robots that will identify the signals for you and even open and close your trades automatically so that you are trading the forex market on autopilot.
Unlike most financial markets, the forex market is active 24 hours a day during the business week. This is because of its global nature. The major financial centres of the world operate in different time zones and you can trade whenever any one of them is open. Between them they cover the whole 24 hours.It is a very high liquidity market with an average daily turnover that is now estimated to be close to $4 trillion a day. This is more than the combined turnover of all the stock markets in the world.
This makes it a very attractive market to trade because if you pick a popular currency pair you can be almost sure of getting all of your trades matched. Of course there are some businesses and individuals who are exchanging currencies for the purpose of trade or travel to foreign countries, but an estimated 70% to 90% of foreign exchange transactions are speculative.
That means that the person ordering a currency purchase or sale will never take delivery of that currency, but will trade it back with the aim of making a profit. There is no fixed exchange location although people talk about the dealing floors in the various financial capitals like New York and London.
In reality the forex market is simply the communication between all of the large banks and institutions that have dealing desks. They deal directly with each other and the smaller investors get involved through a broker who can enter this market.
Trading can take place by phone but these days, more and more is done on the internet. This has allowed many private individuals to begin online forex trading and you do not need a great deal of capital to get started.
If you would like to learn more about Forex Trading please Order your Free copy of our Forex DVD. Simply fill out your contact details and the DVD will be sent to you in the post. Alternatively you can download our Free Forex Ebook which explains forex trading as well.
