The world has become a global village and trade between different countries has increased over the years. Different countries have different currencies and for trade to be done smoothly between countries there is need for a platform in which the conversion from one currency to another becomes easy. That is why the foreign exchange or Forex market place has grown to be one of the biggest in terms of financial markets. There is always someone ready to buy in one currency as well as someone willing to sell. Unlike other markets, there is no set marketplace for forex and most transactions are done online. Also the market is open 24/7 for most days of the week. This is actually due to differences in time zones across countries. When trading ends in one country, it may just be beginning in another country based on the time zones. That is why the forex market remains active for most of the day. We’ve been talking about trading and a newcomer to the business may wonder what is being traded. Of course its money! If someone was to propose you the opportunity to trade in forex, you may be confused as there’s no physical good being sold. However, buying forex is like buying shares.
The price at which a currency is sold against another currency is a reflection of the economic health of that country. For traders, the sole aim of buying and selling currency is to be able to make a profit. In forex trading, currencies are represented by three letters. The first two letters represent the country and the last letter the name of the currency. For example, the pound sterling will be represented by GBP which reads out as Great British Pound. Unlike in the past when the market for foreign exchange was only available to major banks and dealers, it is now possible for smaller dealers and even individuals to take part in the market. This is all thanks to market brokers who’ve succeeded to split the bank units. The forex market is like shark infested waters and only those who know how to resist getting swallowed will survive.
This means that you can either become a millionaire over night or lose all your millions in one night depending on how you trade. It is unfortunate that many of those that are new to forex look at it as gambling and end up losing their money. An advice to beginners in forex trading is to play for free as long as it’s necessary to build up your trading skills. It is possible to register with brokers and get a demo account. This demo account can be used to follow trends and estimate how well you are doing without the risk of losing any real cash. Unfortunately, there’s no formula that will work every time and you’d have to make decisions and accept the results. An important aspect that may help in forex trading is following the news from different countries that may affect their economic outlook.
