Trading Forex Simply Explained

In 1971 the Bretton Woods Accord was abandoned resulting in the formation of the Foreign Exchange Market Along with that the system of universal fixed exchange rates was dismantled.

Forex and FX are abbreviations derived from the words Foreign Exchange.

It is estimated that foreign exchange turns over more than 1.7 trillion dollars every day with forex trading, making it the biggest financial market in the world. This incredible turnover surpasses the combined daily turnover of all the world’s stock markets.

Unlike various other markets, the Fx market is open twenty four hrs a day, making it a very liquid market and consequently a very appealing market to trade.

Unlike other financial instruments that can be traded, the FX market does not have a fixed exchange (like the ASX or the NYSE for example).

FX trading is basically between financial institutions, banks, dealers, brokers, and private individuals.

Advances in technology, in particular the world wide web along with the use of high security encoding technologyenables the private individual to do forex trading on-line.

Accessing the Fx market has never been more accessible and easier for the private trader.

The large majority of small traders were previously excluded from trading due to the sizeable deposits ($1m) required by brokers But this has changed with affordable deposits now required, making it a lot easier for small investors to trade.

What also makes Foreign exchange trading attractive is the fact that private traders can monitor as well as execute trades online from
anyplace in the world.

So why would you want to trade forex?

* 24-hour, 5 days a week with continuous access to global dealers.

* An enormous liquid market making it easy to exchange most currencies.

* Highly volatile market providing opportunities to profit significantly.

* Systems available for reducing risk exposure.

* The ability to profit in rising or falling markets.

* Low margin requirements with higher leveraged trading.

* No dealing commission.

* Live access from anywhere in the world.