If you are someone who is interested in investing, you must surely have heard the term, Forex Trading. What many investors do not know is that "Forex" is not a new term by itself, but rather a short form of "Foreign Exchange". As the name implies, Forex Trading simply refers to Foreign Currency Trading.
As recently as ten years ago, Forex Currency Trading was restricted to the large institutions and banks as they only had access to the tools and systems required to meet the then high barriers of entry set in the Forex Trading game.
Today, things have changed drastically. Recent advances in technology have empowered the individual investor to participate in the game, and trade with any of the various online trading platforms that exist today.
Once you get started with buying and selling in the Forex Currency Trading market, it will become obvious to you that there exist four "Currency Pairs" that completely dominate the Forex market. The four pairs are "US Dollar vs. Euro", "US Dollar vs. British Pound", "US Dollar vs. Japanese Yen" and "US Dollar vs. Swiss Franc".
The prime goal of any investor who deals in the Forex market is to hold a currency that is appreciating in value in relation to the other currencies. To illustrate with an example, if you choose to buy 100 British Pounds in exchange for 200 US Dollars, hold the 100 British Pounds for a week and in that period, the value of the British Pound appreciates in relation to the US Dollar, you get to convert those Pounds back into Dollars for say $ 250 and make a tidy profit.
Unlike domestic stock markets around the world that operate for only a few specified hours each day, Forex Currency Trading is open 24 hours a day. Since every country trades on the Forex market, it's always business hours in some part of the world and so it's open all day. The volume of trade on the Forex market is roughly a whopping $ 1.2 Trillion.
Another important distinction is that Forex Currency Trading is not centered on any exchange such as the NASDAQ. There is no central governing authority or organization and trading is carried out between all major banking institutions of the world.
The advent of the internet has given rise to online Forex Brokers which are similar to an online stock trading account. These brokers have thousands of investors placing orders through their online portals and so are able to allow anyone to open a Forex account and buy and sell in any quantity.
Times have changed and made it extremely easy for anyone to trade on the Forex Currency Market. But, a new investor must keep in mind that it is a very complex and complicated environment that may offer amazing opportunities for wealth creation, but it is also capable of relieving you of your hard-earned money in an easy fashion. A would-be investor is advised to do a lot of homework and gain as much knowledge as possible about the Forex market before choosing to make an investment.
Source by Mike Freije